Facebook’s Libra to be pegged to the US, Euro, Pound, Yen, Sing dollar

Responding to concerns from Virginia senator Mark Warner that China may influence Facebook to include the Yuan into its stable coin constituents for its cryptocurrency Libra, the social media giant shared that the initial basket of currencies that will back the digital token will likely include the United States (US) dollar, the Euro, British Pound, Yen, and Singapore dollar.

As a stable coin, Libra is to be pegged to a basket of bank deposits and short-term government securities for a group of historically stable international currencies, Facebook had explained in its whitepaper released earlier this year.

Warner had raised the concern because he thinks that China is attempting to add stability to its currency as the country has been encouraging governments to include its currency into their reserve holdings.

Facebook said the Libra Association - a suggested group of 100 members formed to govern the cryptocurrency - will make the final decision on which currencies to include into the basket.

Facebook added that it is also open to launching the digital currency outside of the US even if its local regulators have issues with the cryptocurrency.

But the company will comply with regulatory requirements per jurisdiction. ‘We understand that the Libra Association will not offer the Libra digital currency in any jurisdiction until it has fully addressed regulatory concerns and received appropriate approvals in that jurisdiction,’ it said.

Essentially, Libra is attempting to create a universal cross-border digital “currency” with the aim to promote financial inclusion for the unbanked. Based on a World Bank research paper The Global Findex Database 2017, there are currently around 1.7 billion people in the world who lack a bank account.

Providing details on its cryptocurrency in June this year, Facebook said Libra will be governed by the Libra Association based in Geneva, a council formed to make decisions over the cryptocurrency so that no one single authority can make the full decision on issues surrounding the coin.

Facebook's crypto rival: China's digital currency

According to crypto news wire Coindesk, China’s new digital Yuan will be able to be transferred between users without an account and without a mobile or internet network. The digital currency can also be transferred via near-field communication, a trait which Libra does not have, said Changchun Mu, who is leading the Digital Currency Research Institute at the People's Bank of China (PBoC).

The digital currency will be delivered via commercial banks like fiat currency. The banks must open accounts with the PBoC and buy the token at 100% value. Thereafter, users may open digital wallets for the digital currency through the banks or commercial organizations.