Facebook’s cryptocurrency Libra hasn’t exactly had a good start, with critics pummeling it from all sides since its revealing in June. Most recently, France and Germany said they would block Libra altogether, as they deem that no private entity should attempt to claim monetary power.
But the company (and its Libra partners, which have mostly remained silent since the launch) trudges on. A week ago, Head of Calibra (the wallet for Libra) David Marcus took to Twitter to debunk the notion that Libra threatens the monetary sovereignty of nations.
And on Friday, German outlet Der Spiegel revealed (via Reuters) that Libra would be backed by a basket of currencies consisting of the U.S. dollar, Euro, Japan yen, British pound, and Singapore dollar. Notably, China’s yuan is absent, which addresses concerns of some U.S. politicians who worry that yuan is becoming too strong a reserve currency.
Libra, based on a blockchain platform of the same name, is a special type of currency called a stablecoin. These are typically backed by real-world assets and designed in such a way that their value remains stable compared to those assets. In Libra’s particular case, the stablecoin will be backed by fiat currency and short term government bonds.
The breakdown for Libra’s backing currencies, which reportedly comes from a Facebook letter sent to German politician Fabio De Masi, is as follows: 50% U.S. dollar, 18 percent euro, 14% Japanese yen, 11% British pound, and 7% Singapore dollar.
The news might soothe some China skeptics, but it’s unlikely to fully satisfy European politicians, some of whom seem to be against the very idea of Libra.
Meanwhile, Facebook has remained adamant about its intent to fully comply with regulators’ demands before launching Libra.