The Facebook-backed association Libra on Thursday unveiled plans to seek approval for digital coins in individual currencies, revamping its cryptocurrency initiative in a bid to minimize disruption to the global monetary system.
The new plan submitted to Swiss regulators could curtail the ambitious digital currency initiative unveiled last year and touted as a tool for financial inclusion but criticized by world monetary leaders.
Under the new plan, separate “stablecoins” would be created and pegged to real world currencies such as the US dollar and the euro.
The Switzerland-based association, which includes Facebook and various partners, said a switch to using individual currencies was made after hearing comments and complaints about its original proposal.
“A key concern that was shared was the potential of the multi-currency Libra Coin to interfere with monetary sovereignty and monetary policy,” the association said in a white paper.
“We are therefore expanding the Libra network by including single currency stablecoins” in addition to the multi-coin Libra.
The association is seeking approval from the Swiss authorities for digital payments and is considering registering in the United States as a money services business, a spokesperson said.
Libra, a large-scale project launched by social media giant Facebook, is slated to launch this year, but has come under heavy criticism from some of the world’s most influential financial authorities.
Central bank officials and others have expressed concern over a blow to their sovereignty by a new Libra coin pegged to a basket of currencies.
At the end of last year, the French Minister of the Economy, Bruno Le Maire, expressed his concerns bluntly, declaring: “Libra is not welcome on European soil”.
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Facebook introduced the cash initiative as a way to cut costs for people around the world, by eliminating the high fees for cross-border transfers.
Managing Director Mark Zuckerberg said Libra could extend America’s “financial leadership” while providing “a secure, inexpensive and efficient way to send and receive payments around the world.”
Critics said the plan would give Facebook too much power, but the California-based company argued the system would be run by an independent board of directors comprising businesses and nonprofits.
The Libra association said Thursday it had taken an “important step” by launching an authorization process for its payment process with the Swiss Financial Market Supervisory Authority.
The goal is for Libra to complement existing currencies and monetary policies while reducing costs and allowing greater access to banking services and finance for individuals and businesses, the association said in a white paper.
Libra strengthens the Libra financial compliance network when it comes to thwarting money laundering and other illicit activities such as terrorist financing or sanction avoidance, according to the association.
Libra has also said it is toughening up the defenses of its tech platform and the reserve that backs digital currencies.