On June 18, following the swirling rumors preceding the announcement, Facebook announced that they would be releasing their own cryptocurrency in 2020 alongside the underlying blockchain that will support it. Their goal is to create an alternative to a traditional banking system, as Libra will be simply a form of digital money backed by a reserve of assets. By making this system cheap and readily available globally, they can create a globalized system that requires nothing more than a smartphone to access, send money, or pay for anything.
Facebook also announced while they are the creators of Libra, the Libra Association will be the primary overseer of the project. So far, 27 partners have aligned with the project. The partnership includes a wide range of backers, from nonprofits, crypto firms, and corporate firms, to name a few. With backing from these partners, they can create the Libra Reserve, funding the stable coin after its release.
While most cryptocurrency will remain unaffected, as many of them represent a digital currency rather than a fiat currency, there will be some impact on other stable coin and companies that focus on payment solutions. This will cause some fluctuations in already established cryptocurrency as Libra, with the backing of both Facebook and the Libra Association’s partners like Visa, MasterCard, and Paypal, they may already have a headstart in migrating in the traditional markets as well as the digital one.
Following the announcement of Libra and their desire to become a global currency and payment platform, Australian Governor of the Reserve Bank of Australia (RBA), Philip Lowe has emphatically stated that he doesn’t believe that the future of cryptocurrency as a global currency will take hold in Australia. He said that “[t]here’s a lot of water under the bridge before Facebook’s proposal becomes something we’re using all the time […] There are a lot of regulatory issues that need to be addressed and they’ve got to make sure there’s a solid business case, so we’ve got to be careful before we jump to conclusions.”
This isn’t entirely unfounded, as Libra is wanting to change the way that the world interacts with money. As the concerns for cryptocurrency regulations increases as the market becomes more saturated, Libra could start a whole new batch of concerns as time goes on, but it’s difficult to know to what extent it will need to be addressed. It’s unlikely that we’ll have any idea until the currency is released and Libra holders and companies have time to interact with it for a time.
Lowe also stated that Australia “already [has] a very, very efficient electronic payments system that allows anyone of us to make bank payments to another person in five seconds just knowing their mobile phone number.”
The platform that Lowe is referring to is the Australian’s New Payments Platform (NPP), which was launched in 2012, and has a rollout of the PayID system with their big four banks in the country in July of 2019. As it stands, there are currently still some doubts about the NPP’s capabilities and the ability for the big four banks to perform at needed levels to make the system completely viable. So far, end-users have been disappointed by the application, and this may prove a significant hurdle to increasing the NPP’s reach in the future.
The RBA still has time to try and reinforce their current system before the launch of Libra in 2020, but as of yet, there is still no telling how Libra will do when it comes out onto the market or how the global economy will fair in the wake of its release. For the NPP to become the preferred method of payment in Australia, they will have to overcome previous shortfalls and to build up end-user support of their system to be able to take hold of the heavy-hitting competitor.