The famous social network, Facebook, sent a letter to a German legislator to explain what the fiat currencies will be that will guarantee the stability and value of Libra.
According to the publication, the cryptocurrency of Facebook, Libra, will not be denominated in dollars, but will be dominated by the US currency, according to a note from the German magazine Der Spiegel where he quotes the letter that was sent to the German legislator by the social network.
They explain that the US dollar will represent 50% of the fiat currency basket that will support the value of Libra. The rest of the currencies are the sterling with 11%, the euro with 18%, the yen with 14% and the Singapore dollar with 7%, according to the report.
It should be noted that this group of fiat currencies does not include the Chinese yuan, in accordance with the provisions of the company before the Senate Finance Committee in early September, given that with its exclusion “they try to appease the concerns that the inclusion of the currency it would expose Libra to the influence of the Chinese government, ”they said in the statement.
A spokesman for the Libra Association said in a statement:
“Libra reserves are expected to be a common fund of fungible cash and very short-term government securities that are expected to be denominated in US dollars, euros, yen, British pounds sterling and Singapore dollars.”
It is determined that Libra will function as a stablecoin currency, which means that its value is anchored to the value of a fiat currency in order to avoid the volatility of Bitcoin.
Since the announcement of its launch, the Libra project has faced a series of limitations that are given by the concerns expressed by regulators and central banks regarding the possible use of this cryptocurrency in illegal activities, such as money laundering and financing of terrorism.
In July, the Congress of the United States of America asked Facebook to stop the development of Libra concerned about the “scarce information” and the “lack of regulatory protection” behind the cryptoactive.
Earlier this month, a member of the executive board of the European Central Bank warned of the great threat that Libra poses to monetary policy and to consumers in the European Union.
Yves Mersch, a member of the ECB executive board, said:
“Libra could reduce the control of the ECB over the euro, affect the transmission mechanism of monetary policy by affecting the liquidity position of euro area banks and undermine the international role of the single currency.”
On the other hand, it was recently informed that after a meeting of ministers of Economy and Finance of the Eurozone held in Helsinki, another member of the executive committee of the European Central Bank (ECB) justified the need to set a single regulatory approach in the European Union for cryptocurrencies.
The meeting was a debate on cryptocurrencies, where ECB official Benoît Coeure also defended the need to set a global regulation on cryptos, ensuring that there is a high risk for inconsistencies between the regulations of different jurisdictions “more beyond Europe. “
Recently, a meeting between the United States Congress and the SEC has been scheduled for Tuesday, where the Financial Services Committee of the US House of Representatives has planned to interrogate the SEC about cryptocurrencies, specifically about Facebook Libra, in addition to other important issues related to the crypto world.