- Facebook has confirmed the exact composition of the currency basket to a financial spokesman of the Left Party in the German parliament.
- According to this, 50 percent of each Libra coin is made up of the US dollar and short-term American government bonds. The following article explains which other currencies are included.
Facebook caused a stir in the middle of the year when the public was informed that Facebook would launch its own digital currency, Libra, which is covered by different fiat currencies. As a result, Facebook has received a hail of criticism, not only from the public, but also from various governments around the world, including the USA.
In order to get a chance for approval, Libra must comply with the laws of many countries around the world. Only then governments will also approve the use of the cryptocurrency. Much counter wind is blowing at the moment from France and Germany. In an interview, the French Minister of Finance, Bruno Le Maire, said that Libra “has no chance of a permit in Europe”:
All these concerns about Libra must be taken seriously. I therefore want to make it quite clear that under these circumstances we cannot allow the development of Libra on European soil.
The German federal government is similarly reluctant to allow private companies to develop any digital currencies in Germany. Nevertheless, Facebook is currently in close contact with regional authorities all over the world in order to make the introduction of Libra as smooth as possible.
This is what the Libra currency basket looks like in detail
As CNF reported earlier, American Senator Virginia Mark Warner declared his opposition to the Chinese yuan. So far there have been no official figures on the composition of the currency basket. In response to a request by Fabio de Masi, financial spokesman for the Left Party in the German Bundestag, Facebook announced that 50 percent of every Libra coin would be covered by the US dollar and short-term American government bonds. The rest of the distribution is as follows:
- 50% USD and short-term American government bonds
- 18% Euro and denominated government bonds
- 14% Japanese and Japanese yen government bonds
- 11% UK and British pound government bonds
- 7% Singapore and Singapore dollar government bonds
Behind each Libra coin is the value from the basket. The issuance of Libra is thus limited to these currencies, as they can only be issued if they are deposited in the form of cash and government bonds. Facebook cannot ” create money out of nothing ” like central banks around the world have been doing for centuries.
The administration of Libra will be taken over by the Libra Association based in Switzerland. This consortium includes heavyweights such as Facebook, eBay, Uber, Paypal and Mastercard.
China brings its own state cryptocurrency into the race
The Central Bank of China, PBOC (Peoples Bank of China) announced last month that it has been working on the development of a digital currency for the last 5 years. The coin is about to be launched and should be launched at the beginning of 2020 at the latest. This will give 1.4 billion Chinese access to a faster and more scalable digital currency, the digital yuan.
The adaptation is to be promoted both in the private and in the commercial area equally. Similar projects such as the JPM Coin (JP Morgan Bank’s digital currency) are only available to a select group of users. The digital yuan will be accessible to Chinese and foreign investors alike and will facilitate global transactions.