IBM executive has said that IBM was ready to work with Facebook on the development of its cryptocurrency Libra.
Jason Kelley, IBM’s blockchain general manager, says,” Our clients are ready to work with (Facebook) and we’re ready to work with all of them to bring it together,”
Jason did not clarify whether IBM wanted to join the Libra Association or not.
Facebook’s cryptocurrency Libra will be backed by a basket of currencies, namely the US dollar, euro, yen, and Singaporean dollar. The management of Libra’s assets will be done by a Switzerland based trust of financial services firms. Libra would be accessible to all of Facebook’s 2 billion global customers.
Libra has run afoul of global regulators like the US, UK, France, and Germany have all expressed their opposition to it over grounds that it will impact nation’s sovereignty over their monetary policy among others. In spite of these objections, Facebook has announced that it will be able to launch Libra by the second half of 2020, its original deadline
IBM has been working in the field of digital assets replacing physical ones for carrying out international banking transactions. It has developed the Stellar blockchain and is using it on its World Wire service which allows banks to use stablecoins to carry out international transactions. That will eliminate third parties like banks and services like SWIFT thus increasing the speed of transactions. Six banks have signed letters of intent to use stablecoins for international transactions.
Stablecoin is a cryptocurrency backed by fiat currency. It is more acceptable among banks and other financial institutions for carrying out transactions as a physical reserve backs it.
Libra is being touted as a stablecoin as a basket of fiat currencies backs it, but the fact that it is not pegged to a single currency and that it will be accessible to 2 billion users is making governments jittery that it will not be able to avoid the volatility of a traditional cryptocurrency.
Libra will be a giant step towards mainstreaming of cryptocurrencies globally. That will overcome the cumbersome incremental local mainstreaming underway today. Also, Libra needs global legal architecture. Thus, it would be just like any fiat currency, just of a global nature.
IBM will be hoping to use its expertise in blockchains to help Libra overcome the regulatory hurdles.