Facebook unveils Libra, a planned global digital currency backed by a basket of assets

Facebook on Tuesday announced Libra, a digital currency it plans to launch next year together with a group of partners including payment, technology and telecom companies.

Libra is designed to be a stablecoin backed by a reserve of bank deposits and short-term government securities in several currencies. It would be governed by the Libra Association, a non-profit based in Geneva. Facebook has also created a subsidiary, Calibra, to build a digital wallet for the currency that would work inside its messaging apps.

The company says the project aims to make it cheaper and easier to send money across borders, particularly for people without bank accounts. The response from policymakers has been swift and largely sceptical. Officials in Europe and the US have raised concerns about:

• Monetary sovereignty if a private currency gains mass adoption
• Privacy, given Facebook's track record with user data
• Money laundering controls and consumer protection

Several US lawmakers have asked Facebook to pause development until Congress can hold hearings.

Whatever happens to Libra, the announcement has changed the conversation. Central banks that previously saw crypto as a niche issue are now considering how a private currency with a huge user base could affect payments, and whether they need digital currencies of their own.