Securing crypto-money: Facebook does not use Chinese currency at Libra

Worried US politicians can breathe easy: Facebook does not want to pair its planned cryptocurrency Libra after SPIEGEL information to the Chinese yuan. In response to a request from the finance spokesman of the Left Party faction in the Bundestag, Fabio De Masi, the company for the first time tells how the basket of currencies, with which it wants to hedge the issue of Libra, should be composed. Each coin should therefore be covered to 50 percent by dollars and short-term US government bonds. Euro and euro-denominated government bonds should account for 18 percent. The remainder is made up of cash and government bonds from Japan (14 percent), the UK (11 percent) and Singapore (7 percent).

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Behind each Libra would be a unit of this currency basket. Facebook could only publish as many Libra as foreign currency in this composition are deposited therefor. The Libra administration is to take over the Libra Association based in Switzerland. The consortium includes numerous corporations, including next to Facebook, including Visa, Mastercard, Paypal, Ebay and Uber.

Recently, Democratic US Senator Mark Warner warned against adding the yuan to the basket of currencies. China is currently developing its own digital currency. In addition, the leadership in Beijing has been trying for years to make the yuan more popular as a global currency, as well as to expand the country's economic power. China and the US are engaged in a bitter trade dispute. The US has been accusing the country for decades of artificially weakening its currency to help the export industry.

Left calls for central bank account for citizens

The federal government flatly rejects Libra. She fears losing the state monopoly on money to private companies. Facebook also said it would locate its service subsidiary Calibra in Ireland to serve European Libra users and to comply with EU money laundering guidelines. Calibra is to develop online applications to use Libra digitally, for example via WhatsApp or Instant Messenger.

Left-wing politician De Masi was disappointed that Facebook did not rule out using Calibra's financial data that Facebook collects from its users. This is a threat to democracy, freedom and financial stability, said De Masi. Moreover, Facebook can not explain how without deposit insurance or central bank losses are to be handled, without threatening the financial stability.

The MP fears that Libra will become a mega-financial monopoly - especially if at some point credits would be given in the cryptocurrency and Libra would draw new money. Therefore, the project is prohibited. Instead, the left-wing politician demands that "every citizen should have the right to keep an account with the central bank, which has been deprived of the banks' money-creation and the data thugs like Facebook."

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