Briefing

Facebook executive says Libra won’t replace national currencies

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David Marcus, head of Facebook’s Calibra digital currency division, tweeted that the coin will be backed by banknotes, so “for any unit of Libra to exist, there must be the equivalent value in its reserve.” Earlier on Monday, he appeared before officials from 26 major central banks to answer questions about the goals, design and target user base for Libra, as part of a conference on stablecoins organized by the Bank for International Settlements. (The Logic, Financial Times)

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Talking point: The central banks aren’t only looking at regulating Libra—some are also planning to compete with it. In August, Bank of England governor Mark Carney suggested replacing the U.S. dollar with a “synthetic hegemonic currency” as the world’s dominant reserve currency—the banknote held in the largest quantities by central banks for their foreign exchange transactions. But he said central banks should create a new token after setting up their own digital currencies, rather than adopt Libra. Several governments that have expressed concerns about Facebook’s plans are considering creating their own tokens, which would be necessary for Carney’s proposal. In September, French Finance Minister Bruno Le Maire said he’d spoken to the incoming and outgoing presidents of the European Central Bank about a “public digital currency”; he also said France would block Libra’s development in Europe. On Friday, German ruling party lawmaker Thomas Heilmann said his government’s new blockchain strategy will not allow Libra to operate in the country, although it is open to a state-backed token.