Facebook announced the launch of Libra, a new digital currency that aims to transform how we pay and transfer money.

Calibra, Facebook’s Libra ewallet, has the potential to shake the entire payments industry through its scale and value.

However, Libra faces multiple challenges, including regulatory hurdles and Facebook’s chequered past with privacy and data security.

Since Bitcoin’s 2008 whitepaper, digital currencies such as Bitcoin and Ethereum have enjoyed a rollercoaster ride when it comes to value and publicity, with new coins entering the space as fast as they leave. However, no coin to date has permeated into our everyday lives. But Libra changes everything. On the 18^th June 2019, Facebook announced the launch of Libra, a new digital currency, by the first half of 2020. It aims to allow frictionless financial transactions between billions of users around the world.

Backed by some of the world’s best-known technology companies, Libra will be a ‘stable coin’ that will disrupt payments providers and banking institutions if it succeeds. Digital currencies have been historically met with harsh scrutiny and enforcement from financial regulators worldwide due to money laundering, taxation, and security concerns. We expect Libra to face the challenges and in fact expect greater scrutiny given Facebook’s chequered history when it comes to privacy and data security. In this report, we look at how Libra works, the commercial implications of Libra, and explore the risks and challenges that Libra may face.

Contents

Introduction

How Libra Works

• The Libra Association – Benevolent Overseers or a Crpyto Oligopoly?
• The Libra Currency and Reserve – Legitimacy is built on stability
• Libra’s Beneficiaries

Challenges – The threat of Libra is real

Risks

• Can Libra be trusted?
• A new arms race for payments?

Conclusion

List of charts/tables

Figure 1. The Libra Association’s Founding Members

Figure 2. Determining the value of Libra Currency

Figure 3. Traditional payments infrastructure.

Figure 4. 2019 Fintech survey results on the reasons against financial services uptake