Fintech Daily Digest

If you buy most things online, and if everything online is priced in Libras, then you'll end up living your life denominated in Libras, and only converting your Libras into dollars on your occasional touristic visits to the physical world. The goal is for Libra to be more useful than any national currency, accepted in more places and with fewer complications; pegging it to a single national currency would only hold it back.

An in-depth review of Facebook's long-anticipated entry into cryptocurrency

This document contains several parts: (1) What is the purpose of the reserve? (2) How is it getting set up? (3) How do entities interact with it? And (4) How will it change over time?

UBS is spearheading the use of smart contracts for some Asian structured products to reduce manual inputs required for trades, which it believes will save costs and boost profit margins.

Facebook has revealed plans for an ambitious new digital currency, Libra, ending months of speculation about the project. The work is in its early stages but Facebook has published documents revealing ideas for the currency and some heavyweight partners. Many of the details will be hashed out in the coming months.

Signing up for Calibra will require KYC (know your customer) verification, meaning that users will have to upload some sort of government-issued ID before they can start using the service.

Ripple has struck a deal to buy a stake in money transfer giant MoneyGram that will see MoneyGram using XRP as part of its day-to-day operations by way of Ripple's xRapid transaction product. MoneyGram started piloting the token back in January 2018.

From a technical perspective, the consensus mechanism that helps members with different interests come to an agreement uses a modified version of the math behind bitcoin's Byzantine Fault Tolerance (BFT) algorithm, called BFTLibra.

A possible policy impact could come from Libra's use as a safe haven. It may be easier for people to flee to Libra than to dollar assets, which could impact exchange rates worldwide. To the extent Libra attracts depositors away from banks, it could have an impact on banks' access to funding.

PayPal, for example, charges a three percent transaction fee, which takes a substantial cut out of businesses and freelancers who use their payment service for the majority of their transactions. Unless PayPal and its peers lower their fees in response to the new competition from Facebook, they could end up losing substantial market share.

Facebook says that Calibra customers' account information and financial data will not be used to improve ad targeting on the Facebook family of products and only in limited cases will information be shared to reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra.

U.S. regulations may represent another hurdle for Facebook. The SEC has shut down about a dozen businesses issuing their own tokens for violations of securities law. Facebook has been in contact with the SEC, but it hasn't received a "no-action" letter from the SEC yet. That would have safeguarded the project from regulatory action by the agency.

A digital challenger with the clout of Big Tech is the stuff of nightmares for the old guard of finance. Facebook says that money transfers with Libra will be fast and cheap. That would undercut banks' transaction fees, especially internationally.

Some are comparing Facebook's Libra Reserve scheme to the IMF's Special Drawing Right (SDR) system. This makes sense. It's based on a basket of currencies just like Libra intends to be when it is launched next year. But the truth is Libra is anything but an SDR system.

Talk of decentralised structures is everywhere in the introductory material, but for now the system only aspires to achieve decentralisation at some point in the future. Libra Blockchain will be coming to market in fully permissioned form, effectively centrally controlled by the founder Libra coin holders.

In addition to Libra, the project will also issue a "Libra investment token" that will be sold only to the founding corporate members of the Libra Association, and accredited investors. Excess interest earned on the portfolio backing outstanding Libra collateral will go to holders of the investment tokens.

Facebook has built a dedicated computer programming language called "Move" to provide more flexibility to the Libra blockchain. By building programmability into the blockchain, it can take advantage of new functionality or new techniques, without an entire network upgrade.

Among the payments giants, a number of NGOs are involved in the Libra Association, including Creative Destruction Lab, Kiva, Mercy Corps and Women's World Banking. To become a "Social Impact Partner," participating non-profits must have a five-year track record of poverty alleviation work, including digital financial inclusion initiatives in the field, and an operating budget of greater than $50 million.

Third parties will be able to build their own apps, wallets, and marketplaces around Libra. If you want to, though, you can use Facebook's digital wallet, Calibra, a regulated subsidiary. In the US, Calibra is registered as a money service business, and will be overseen by the US Treasury.

Libra is nothing more than a brazen attempt to override national monetary sovereignty by creating a global-scale Fed equivalent - within which Facebook's dominance is veiled by the cunning use of buzzwords like blockchain, DLT, decentralisation and cryptocurrency.