On 18 June 2019, Facebook announced its plan to launch Libra, a stablecoin built on a tailored version of blockchain technology designed to let people shop and make low-fee moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More transfers globally. Libra aimed to be the first global peer-to-peer payments network. It claimed it would serve the 1.7 billion people in the world who lack access to traditional banking. The new currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More was initially tipped to launch in the first half of 2020.

Massive Pushback from Regulators

The project triggered a massive backlash from government regulators and central banks around the globe, and the general public, over monetary sovereignty, financial stability and privacy.

• Minutes after the launch announcement, the French Finance Minister and then President of the G7 Group of Finance Ministers Bruno Le Maire said that Libra could not become a sovereign currency and would require strong consumer protections.
• Bank of England governor Mark Carney said, “anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation.”
• Christine Lagarde, President of the European Central Bank, had previously warned about the dangers of potential disruptors using distributed ledger technology: “We don’t want innovation that would shake the system so much that we would lose the stability that is needed.”

US regulators and politicians expressed concerns within hours of the announcement.

• Maxine Waters, Chairperson of the United States House Committee on Financial Services Committee, asked Facebook to halt the development and launch of Libra, citing a list of recent scandals and that “the cryptocurrency market currently lacks a clear regulatory framework”.
• Jerome Powell, chairman of the Federal Reserve, testified before Congress on 10 July 2019 that the Fed had “serious concerns” about how Libra would deal with “money launderingThe operation of attempting to disguise a set of fraudulently or criminally obtained funds as legal, in operations undeclared to tax authorities, and therefore not subjected to taxation. Money laundering activities are strongly pursued by authorities and in most countries, there are strict rules for credit institutions to cooperate in the fight against money laundering operations, to declare and report any transactions that could be considered suspicious. More, consumer protection and financial stability.”

On July 15, 2019, Facebook announced the currency would not launch until all regulatory concerns were met and Libra had the “appropriate approvals”.

Consumer advocates and public interest groups have opposed Diem on privacy grounds and rejected the tethering of financial services to mass surveillance. Scholars have highlighted several antitrust risks associated with Diem due to the sheer scale of Facebook and collusion between association members.

• “A reserve currency under the control of a private corporation could threaten democratically elected governments, something that should not be undertaken lightly.” wrote Roger McNamee, an early investor in Facebook in an Op-ed in USA Today.
• Finance Watch, a European non-governmental association conducting research on financial regulation, concluded in a July 2019 paperSee Banknote paper. More that Libra was “a bad idea – for its users, for the stability of our financial system, and last but not least for our democracy”.

Dwindling Backing from Sponsors

The initial Libra association was initially backed by up to 28 organisations, including payments service providers such as Visa, MasterCard, PayPal, Stripe and Vodafone. In October 2019, these organisations left the consortium. “We will continue to evaluate, and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations,” a Visa company spokesperson said to the Financial Times in October 2019.

On 1 December 2020, Libra was renamed Diem, which “denotes a new day for the project”, according to the press release. Still, for most observers, it was an attempt to distance the project from Facebook in the eyes of regulators. Facebook’s rebranded its Calibra wallet to Novi. Diem moved its headquarters from Switzerland to the United States. In October 2021, Facebook Inc. rebranded itself as Meta Platforms.

More importantly, the initial ambition of a global digital currency backed by a basket of national currencies was considerably scaled back to a series of stablecoins backed by the country’s currency. At the end of 2021, David Marcus, the initiative’s founder, left Facebook.

On 31 January 2022, a press release announced the sale of its intellectual property and other assets related to the running of the Diem PaymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More Network to Silvergate Capital Corporation. “Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead. As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.” The assets were purchased for $182 million. Silvergate is a licensed bank and has been an early mover in the digital currency industry. Now it plans to take over the project and go ahead with its stablecoin launch this year, in what appears to be yet another rebranding of Diem.

From Diem to CBDC

So, what is the legacy of the Libra/Diem venture? Does it mark the end of private currencies? Certainly not. After all, the new owners of Diem claim they will launch the stablecoin this year. Libra/Diem does seem to have achieved two things, albeit involuntarily. Firstly, it placed cryptocurrency regulation on the agenda of finance ministers, central bank governors and CEOs, and the frontFacade, face. See Obverse. More page of the media. Secondly, it accelerated the research and developments of what is often perceived as central banks’ response to private currencies: Central Bank Digital Currencies. The Indian finance minister, in her budget presentation this week, announced that the Reserve BankSee Central bank. More of India would launch a digital rupee in the upcoming year and would introduce a 30% tax on cryptocurrency trading profits. According to the Atlantic Council CBDC tracker, nine countries have launched a digital currency, and 14 are in a pilot stage.

At the time of writing, the market valuation of Meta plummeted 20%, wiping out $200 billion in value.

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