Davos digital-payments rift pits FB against central banks

Bloomberg

A rift among the global elite over the future of digital payments was on display during a panel discussion at the World Economic Forum’s annual meeting in Davos, Switzerland.
At stake is the potential overhaul of the global financial system that could see companies like Facebook Inc pitted against the world’s central banks in the race to develop a worldwide digital currency. On the one side are private companies looking to capitalise on the cryptocurrency trend that could circumnavigate traditional banking systems — on the other are central banks at risk of being left behind.
“There are so many people that are strapped in the cash economy today that if they have a window into the world’s economy and the ability to digitize their money and have more opportunity, it changes their lives,” David Marcus, the executive who leads Facebook’s blockchain team, said in defense of Libra, the company’s stablecoin initiative.
“The whole idea was really not around a certain way of doing things but more around let’s come together and let’s try to figure out how to solve a problem that is, honestly, unacceptable,” Marcus said during the discussion titled “Creating a Credible and Trusted Digital Currency.”
Facebook has long cited its willingness to help open up financial systems to the poor and unbanked around the world. During the discussion at Davos, Marcus cited the 1.7 billion people currently unbanked and the additional 1 billion underserved by the financial system. It comes down to whether or not banks are equipped and prepared to serve consumers or small businesses, he said.
Facebook‘s Libra project, which the company unveiled in 2019, has been described as a stablecoin that could let more than a billion of its users make transactions online. But given the social media giant’s vast resources and user base, it’s drawn the ire of regulators. Some analysts cited the company’s potential to create a de facto global currency that could challenge the dollar, prompting pushback from central bankers, US lawmakers and even President Donald Trump.
While Facebook initially had more than 20 partners for the Libra project, a number of companies withdrew from the venture as an increasing number of regulators began questioning Libra’s efficacy. In October, several key partners, including Mastercard Inc, Visa Inc, EBay Inc, Stripe Inc and Mercado Pago, defected. Vodafone Group PLC is among the latest companies to join the exodus.