Facebook’s Diem Is A Shadow Of Libra

I guess that Facebook (FB) caused many central banks to realise that if they didn’t issue digital currencies then others would. Hence, why most central banks are issuing them. But it’s not an either-or scenario.

“We will see in the not-too-distant future a sovereign digital currency coming out.”

Michael Corbat, CEO of Citi

“There is absolutely a role for central bank digital currencies as well as non-central bank-sponsored digital currencies.”

Bill Winters, CEO of Standard Chartered:

The latter points towards initiatives like Facebook Financial‘s play.

Facebook has progressed from running their own rails to creating interoperable rails. They’ve renamed Libra to be Diem and their mobile wallet is now Novi rather than Calibra.

What I find interesting here is the repositioning of the service and the change of partners. When the idea was originally touted Visa, MasterCard, PayPal, Stripe and more were all on board.

Now, the members of the Diem Association are all non-traditional financial partners and innovators.

As CNBC reports:

The cryptocurrency was initially called Libra and was designed to be managed by a non-profit consortium consisting of several companies called the Libra Association. Facebook had planned to launch a wallet called Calibra that would allow users to send this cryptocurrency to each other.

One Libra coin was initially supposed to be backed by a basket of currencies. But regulators raised a number of concerns from the impact Libra could have on financial stability to issues over data privacy and money laundering.

In April, the Libra Association scaled back plans and said it would offer stable coins backed by just one nation’s currency, rather than a single coin backed by several currencies.

Big changes.

Supposedly planning for a January 2021 launch and with recognition that they made need to get regulatory approvals in many territories, it strikes me that they’ve been forced to move from creating a stablecoin which made regulators scream to a payment system that conforms with regulatory structures.

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