Rajarshi Mitra
Independent Analyst
- 50% of the basket will be in the US Dollar.
- The Chinese Yuan has been excluded because of the tensions between the USA and China.
As per CoinDesk, Facebook has revealed the percentage breakdown of multiple global currencies that will peg Libra. It’s already clear that 50% of the currency basket will be in the US dollar. Der Spiegel, a German newspaper, reported that the rest of the portion will consist of the euro, the yen, the British pound and the Singapore dollar, with 18%, 14%, 11%, and 7%, respectively. Notably, the Chinese yuan will not be included in the basket. According to Reuters, the exclusion of this currency could help Libra in the US, given the tense trade relationship between the US and China.
Der Spiegel reported that Facebook revealed its percentage breakdown in a letter to Fabio De Masi. De Masi is a German legislator and former member of the European Parliament. He reportedly believes that Libra is a threat to democracy, freedom and financial stability. De Masi had expressed concern that Libra will not be backed by deposit insurance and that coin’s corporate sponsors may use data harvested from its users.
Libra, which is intended to facilitate global payments, is governed by a consortium. This Facebook-led consortium includes Visa, Uber, and PayPal. The cryptocurrency has been controversial from the time Facebook made its announcement.
As China views Libra as a direct threat, it is coming up with its own central bank digital currency(CBDC). This is expected to meet the challenges posed by Libra. Some members of the Libra association may quit due to the controversy. However, most insist that they will continue to stay.
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