This week, David Marcus, Facebook’s vice president of messaging products, addressed one of the prominent criticisms of the global electronic currency since it was unveiled by the world’s biggest social network last month.
When Facebook shared its plans on June 18 for Libra, an ambitious project to create a global electronic currency, it promised to “help bring people everywhere equal access to financial services.” If successful, the new global payments system, backed by a consortium of key players like Visa, Mastercard and PayPal, would enable to reach customers in poor countries and spark a spark a financial revolution in the developing world.
- Since then, many raised questions about how it will be able to achieve that, including the argument about lack of financial resources as the main obstacles holding back the underbanked, not lack of technology.
- “The very people who say they lack the money to open a bank account are actually not saying that they have no use for modern financial services. They’re just saying they can’t afford to access the system, so they remain on the fringes and are forced to use services that charge exorbitant fees and rates,” Marcus wrote in a blog post.
- “With Libra, anyone with a $40 smartphone and connectivity will have the ability to securely safeguard their assets, access the world economy, transact at a much lower cost, and over time access a whole range of financial services. We firmly believe that if Libra is successful, it can be a non-linear step change for billions of people who need it the most.”
- Libra’s progress will be closely watched by regulators, investors and the crypto community, who may get further answers when Marcus testifies July 16 and 17 before the Senate Banking and House Financial Services Committees.
- Karma Takeaway: While Facebook has generated a lot of media attention and recruited prominent financial industry partners to join its crypto consortium, the company still has a lot to prove to investors, regulators and the public in terms of its ability to deliver on its loftiest ambition yet: helping billions of unbanked around the planet.