When Facebook first debuted its new cryptocurrency, Libra, a few months ago, the general reaction was mixed. Most people were hesitant to use “Zuck bucks” if the divisive social media company was behind it, whereas governments raised concerns over stability of the currency and what the endgame was for Facebook.
While we cannot speak for consumers, governments have been poking around under the hood of Libra, with those in the European Union in particular wanting to know more about the cryptocurrency.
To that end Facebook sent a letter to German politician, Fabio De Masi, in a bid to explain how the cryptocurrency is backed and that it will not suffer from the same volatility and instability that Bitcoin and others suffer from.
Having read the letter, published by Der Spiegel, it goes on to list the countries and currencies that will be backing Libra. Perhaps unsurprisingly the United States is the largest backer, with the dollar accounting for 50 percent of its backing. The US is followed by the EU at 18 percent, Japan at 14 percent, Britain at 11 percent and Singapore with seven percent.
As Reuters points out, it is rather telling that the Chinese Yuan has not been listed, with tensions between the US and China potentially scuppering any plans that Facebook has for Libra in Southeast Asian markets.
It’s also interesting to see that no African, South and Central American countries or currencies are backing Libra at this stage.
With Facebook noting that it is a solution designed specifically with the previously unbanked in mind, many of which live in those aforementioned regions, not having backing in those areas may mean a launch in less developed nations is still some ways off for Libra.
Added to this is continued uncertainty in the EU, with French and German officials having already raised issues regarding how a cryptocurrency like Libra could prove destabilising for their economies, not to mention others.
With the cryptocurrency facing heavy scrutiny before it has even been launched, which is still unknown at this stage, it’s clear that Facebook has an uphill battle on its hands with Libra, not to mention whether its intended target audience are even interested in the platform.