The global social media giant Facebook reveals Libra, it’s new digital currency for 2020, but what impact on banking will that have.
Facebook reveals Libra and states that from next year you will be able to purchase the currency via its platforms and store it in Calibra, a new digital wallet.
Once purchased and your account in credit, they say you can send and receive “as easily and instantly as you might send a text message”.
So will that mean the end of traditional banking?
I would suspect from Mark Zukerberg’s perspective he hopes it will, but in truth although it is destined to be very successful, there is very little chance it will replace the established banking network.
They did state, “In time, we hope to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code, or riding your local public transit without needing to carry cash or a metro pass.”
However, even if it were to threaten the current banking industry, it would take a considerable amount of time.
It could prove a more cost effective way of making cross boarder payments, as if it were widely accepted, there would be no foreign exchange (FX) to contend with.
They have not yet confirmed what the transaction charges will be however it is reported they will be either very low or even in some cases, free of charge.
As for paying any bills like mortgages, home utilities or other more regular type payments, it could be some time before this type of ‘currency’ will be fully accepted.
The fact Facebook reveals Libra it won’t have full control, but it is a founding member of the Libra Association alongside Visa, Uber, and Andreessen Horowitz who’ve all invested into the project’s operations.
Although with the direct link to Facebook, it is believed there will be significant interest to change how the world’s finances are operated.
So whilst it will almost certainly not be the end of traditional banking as we know it, there are some warning signs that the way we transact our finances, is changing and could be changing a lot quicker than we think.
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