Despite the initial relatively hostile treatment of Facebook, culminating in the blocking of all accounts that advertised cryptocurrencies, it seems that we are now in the final stretch for the launch of the cryptocurrency promoted by the social network.
As it became known, the Libra Association, the ambitious project of Facebook, announced on Tuesday that it changes its name to Diem (in Latin means day), and in cooperation with 27 member companies is preparing for launch in 2021. Contrary to the ambitious of the plan to change the global payment method, Diem will start as a simple stablecoin (cryptocurrency follows in par with a traditional currency) that is pegged to the dollar.
The federation mainly includes cryptocurrency companies such as Anchorage, Bison Trails, Blockchain Capital, Coinbase – technology startups such as Uber, Spotify, Lyft, Checkout, as well as investment funds. The role of the non-profit society is also important, with Doctors of the World and the KIVA micro-loan platform participating as founding members.
There are many changes in the project leadership team that will try to introduce payments on popular social networks, led by: Stuart Levey as CEO, Sterling Daines as compliance manager, Ian Jenkins as financial advisor, Dahlia Malkhi as CEO Christy Clark as Head of Human Resources, Steve Bunnell as Legal Advisor and Kiran Raj as Vice President of Innovation and Development.
The most popular social network had announced its plans in June 2019, creating a climate of optimism in the cryptocurrency markets for the benefits that the market would have from the expected familiarity of users with blockchain technology and the expected popularity of cryptocurrencies. Libra’s proposal sought to create a low volatility currency consisting of a basket of traditional currencies from various countries. It immediately raised global concerns among lawmakers and central banks, giving headache to founder Mark Zuckerberg himself, who has been repeatedly called to testify about his venture. A large number of the original members of the organization left, expressing their concern about the legislative framework. As far as we know, each company had to pay at least 10 million dollars to be able to participate in the project.
The governing body of the new paying agency was formally formed in November 2019, and in April 2020 stated that it would limit its purpose by creating different stablecoin which will consist of only one traditional currency.
In today’s announcement, Facebook does not seem to be participating as much, however, it is represented both by Novi, the e-wallet (social network subsidiary) that will support Diem cryptocurrencies, and by the company Breakthrough Initiatives related to Mark Zuckerberg.
At the same time, a renewed whitepaper was published, in which all references to the social network have disappeared. There is only one footnote stating that despite Facebook’s initial initiative, all members are peers, and the social network has no special rights to the cooperative.
The Diem Dollar appears to have been licensed by the Swiss authorities, specifically the Swiss Financial Market Supervisory Authority (FINMA).
The European Central Bank in a relevant report that it published was particularly enthusiastic about the possible positive consequences in the euro but also in the lending of the Member States, in the initial design of the cryptocurrency.
The ECB said that in an ambitious scenario, Libra could manage more than $ 3 trillion in funds. Facebook users in the countries that make up the Eurozone make up only 10% of the total. According to the initial thought, the euro would make up 18% of the currency basket that would make up the Libra. This means that more users who do not have access to the euro would save their euro deposits, putting positive pressure on the eurozone currency. Gradually these inflows could approach 243 billion. Accordingly, the Libra could be the largest bond financing of the eurozone countries. Libra would retain the majority of its reserves in time deposits, short-term government bond placements, and cash. 80% of deposits would be held in government bonds, which means even lower borrowing by Eurozone member states.
However, it remains to be seen whether they will be just as positive and will see a corresponding benefit from the potential digital euro monopoly by the Diem Association.
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