banking & banking

US dollar to be main currency backing Facebook's Libra, Singapore dollar also included: Der Spiegel

[BERLIN] The US dollar will make up 50 per cent of the basket of currencies backing Facebook’s planned digital coin Libra, with the euro, yen, sterling and Singapore dollar comprising the rest, German news magazine Der Spiegel reported, referring to a letter from Facebook.

China’s yuan currency will not be included, which could help smooth the planned cryptocurrency’s path in the United States, where officials have raised concerns about the yuan’s growing stature as a reserve currency at a time when trade relations between the two economic powers are tense.

In a letter responding to a question from German legislator Fabio De Masi, Facebook said the dollar would make up 50 per cent of the basket, followed by the euro with 18 per cent, the yen with 14 per cent, the British pound with 11 per cent and the Singapore dollar with 7 per cent, according to Der Spiegel.

Calls by Reuters to De Masi, the legislator who received the letter, were not immediately returned.

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The Swiss-based Libra Association, the non-profit organisation comprising Facebook and 27 other members that plans to launch and oversee the currency, declined to comment on the specific breakdown of the “Libra Reserve”.

But it said the reserve was expected to be a pool of cash and very short-term government securities denominated in US dollars, euros, yen, sterling and Singapore dollars.

Facebook’s planned Libra is the most well-known of the stablecoins, cryptocurrencies backed by assets such as traditional money deposits, short-term government securities or gold. They have the potential to be less volatile and more of a mainstream asset than existing cryptocurrencies like bitcoin.

Regulators around the world have reacted with extreme wariness to the proposal, with central bankers warning they could have a destabilising effect on the global financial system.

REUTERS

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