While Libra, the global currency governed by the Libra Association, has unveiled a plethora of opportunities for trailblazers to disrupt financial infrastructures, the project has been questioned around trust and regulation.
David Marcus, head of Calibra - the new digital wallet for Libra from Facebook - takes to the stage at Money 20/20 USA in Las Vegas to provide insight into how the network aims to transform traditional payments rails by offering the most secure way of moving money the industry has ever seen.
Kicking off the discussion, Marcus highlights that when looking at history, “the most meaningful innovations that have changed the lives of millions across the world in a profound way have always been met with damning headlines.”
Using examples such as electricity, the Internet, mobile phones and smartphones, Marcus states that in the same way as these innovations, the Libra network has the potential to “change the direction of the world.” He adds that the now 21 members of the Libra Association are determined and passionate about this mission.
“These headlines are a preamble to more hard times ahead and we must govern the network into a place where it will meet regulatory standards, then we will see the network come to life. People deserve much better than they have,” Marcus explains.
Marcus goes on to say that “it is all about the people and we believe that there is still no network that is truly global and opens doors to people all over the world.” People with access to digital services are still financially underserved and this should not be a reality.
Referencing the recent G7 report, Marcus disagrees with the fundamental notion that stablecoins pose a threat to national monetary policy. He explores how there would be a threat if Libra prevented the government from having a national monetary policy, which today is done with interest rates.
In addition to this, he says that stablecoins would be a threat if the process involved money creation. “With Libra, there is no money creation; we have a full one to one back reserve, there is no money creation whatsoever,” Marcus reiterates.
Marcus says that in hindsight, he wishes Libra had spoken more about “what we were actually building, which are new payments rails on the internet, the way it should be.” Libra is a payment network and it not a consumer facing product that people will use every day.
“We also designed Libra in such a way so that any wallet can participate as long as KYC and AML requirements are met. It was designed to be competitive, but we still need to earn people’s trust over time to use Calibra.”
Marcus clarifies that there is a “data separation between Facebook and Libra” and data will not be used for ad targeting but will bring distribution. “Moving money around the world with
WhatsApp and Messenger is what will bring real value on a day to day basis.”
Data processes intend to be audited, privacy commitments followed through and due to scrutiny after the FTC settlement, Marcus says that these promises will also be certified. But why blockchain? “If you want to change the way that money moves around, there is no better way,”
Marcus claims and goes on to say that the network allows participants to be part of the governance.
Leveraging blockchain ensures that Libra remains competitive and open. Further, the distribution of nodes around the world helps the network resist attacks with a stable system in which competitive wallets all work together. “I don’t believe Calibra will be the best wallet.”
Marcus adds that while Libra will be used for cross-border payments, there is also potential for domestic payments - the US are still running on ACH, for example.
“AML is something we need to address, and I want to say that the efficacy of sanction enforcing can be much higher on Libra than other payments networks. Digital to digital is more traceable than when cash in involved and will be more secure as it will run on real-time systems.
“The open ledger - the blockchain - enables regulators to look at what is happening themselves and identify where the risk is without relying on reports. The onus is on us to do that work and now that we have the governance structure in place, we can now demonstrate this improvement,” Marcus concludes.