Facebook’s latest venture has caused a stir in both the tech and finance industries. The company announced that it will be launching Libra, its own currency. They plan to partner with a number of big tech companies, venture capital firms, credit card companies, and others on this endeavor. So far, Visa, Mastercard, Uber, Lyft, and Spotify are on board.
At the start, users will be able to send and receive Libra using Facebook’s apps. This includes Messenger and WhatsApp. The company’s ultimate goal is reportedly to turn Libra into a legitimate currency that will be accepted in locations not owned by Facebook.
In conjunction with Libra, Facebook is creating Calibra. This will be a company devoted entirely to creating other services related to Libra, such as a digital wallet. Facebook plans to implement Libra at some point in 2020.
The Libra announcement created a wave of concerns from regulators and privacy watchdog groups.
Maxine Waters, the House Financial Services Committee chairwoman, demanded that Facebook delay its plans until regulators can do a full investigation. Senator Sherrod Brown of Ohio also spoke out against Facebook’s foray into blockchain and cryptocurrency. He claimed that Facebook has become too powerful and has abused its power in the past. He believes that Lira is another opportunity for Facebook to exploit people for its own financial gain.
In July, the Senate Banking Committee, led by Brown, will hold a hearing on the issue. The committee plans to question various Facebook executives involved in Calibra and Libra.
European regulators have also expressed concern about this development. Both France and Germany are calling for an investigation. Bruno Le Maire, France’s finance manager, asked for G7 officials to create a report on Libra. This report will provide guidance on how European companies intend to deal with the situation.
The Bank for International Settlements warned about the inherent privacy issues involved in allowing a big tech company that collects so much data to control a financial element of its users’ lives. They also warned that Libra could destabilize an already vulnerable world-banking system.