Facebook walks back digital currency project Libra

Libra, Facebook’s digital currency initiative, has been faltering since late last year as partners started backing out after regulators opposed the plan.

In a post-earnings conference call this week, Facebook chief executive Mark Zuckerberg said work on the Libra initiative is being handled by the Libra Foundation, stressing the separation between the foundation and the social network.

Facebook has been pursuing other efforts in the payments field, such as Facebook Pay and WhatsApp Payments.

Zuckerberg said the company is “doing a lot” around commerce and payments because “there are lots of different segments for what people are trying to do”.

As for the WhatsApp Payments announced last year, Zuckerberg said it will be a part of Facebook Pay, which will allow users to simply enter their credit card once and for all for purchases in any of Facebook’s apps, including Facebook, WhatsApp and Instagram, thereby offering a frictionless checkout experience across the other apps.

The WhatsApp Payments feature, which had gone through trials in India with a million users participating in 2018, will be launched in a number of countries in the next six months, Zuckerberg said.

Target markets include countries with a large population like India, Mexico, Brazil, and Indonesia.

On the Libra initiative, Zuckerberg stated: “We are taking multiple approaches on payments where things like what we’re doing with payments and WhatsApp or Facebook Pay overall are built on top of traditional payment infrastructure, whereas the longer-term work that we proposed around Libra that’s now being handled by the independent Libra foundation.”

But he said the firm is working on a digital wallet that will work with Libra “so that some of the payment infrastructure around the world can be more efficient, especially for things like transferring money across borders”.

Zuckerberg added: “And if you think about a lot of companies that do payments and such today, are national and are in one country, and there aren’t that many folks who have an incentive to make this work well across different places around the world, so that’s someplace where we thought that we could add.”

He stressed that Facebook’s focus on the payments field is aimed at making it easier for small businesses to get access to payments, set up storefronts, and measure the effectiveness of ads.

“Our goal here is to make sure every individual small business entrepreneur out there has the same opportunity and access to the same type of sophisticated tools that historically only the big companies have had access to,” the Facebook chief said.

Libra, unveiled in June last year, has received sustained criticism from lawmakers and regulators globally over fears that it may be used for money laundering and upend the global financial system.

Testifying before a House Financial Services Committee hearing in Washington last November, Zuckerberg admitted that Libra is a “risky project” and insisted on US regulatory approval before launching it.

Facebook would even leave the Libra Association if other companies sought to launch the currency without that sign-off, he said.

Major financial partners such as Mastercard, Visa, PayPal, Stripe, and eBay have already abandoned the project months after it was unveiled.

But Libra may have helped persuade central banks around the world to issue their own digital currencies.

China is preparing to be the first country to roll out the project, The People’s Bank of China (PBoC) said last month it has basically completed the “top-level” development of its national DCEP (Digitial Currency Electronic Payment).

Research by the Bank for International Settlements (BIS) released last month stated some 20 percent of 66 central banks surveyed said they were likely to issue a digital currency within the next six years, up from around 10 percent a year earlier.

One in ten said they are likely to do it within the next three years.

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CG