Facebook announced the Libra project in June 2019: a payments system which it hoped would be used by billions of people to make easy online payments. The system uses a digital wallet (Calibra) and digital currency (Libra), which would be tied to real-world assets for stability. Facebook planned for the system to be incorporated into its own social media platforms (similar to Wechat incorporating WePay) as well as being accessible through other platforms and a dedicated app.

Although Facebook initially revealed an impressive 28-member ‘Libra Association’ led by its subsidiary Calibra, the association quickly suffered an ugly discharge of supporters, with Mastercard, Visa, eBay, Stripe, and others ditching the project. Vodafone became the latest member to leave the Libra Association in January. Twenty founding members remain committed.

Banga has spoken publicly for the first time about Mastercard’s withdrawal from the ambitious project. Mastercard pulled out of the Libra project in October 2019, just days ahead of its inaugural meeting. According to Banga, the company pulled out after concerns arose over the project’s business model and issues surrounding compliance.

He told the Financial Times (£) that there were no obvious means for Libra to become profitable; according to promotional material, all transactions will be free or very low cost.

“When you don’t understand how money gets made, it gets made in ways you don’t like,” he said. He hinted at concerns about Fakebook’s track record on data privacy; the company has aggressively gathered user data by almost any means necessary in order to develop extremely precise ad-targeting tools.

Another red flag was the reluctance of Libra Association members to commit to know-your-customer, anti-money-laundering controls, or data-management controls. Banga told the Financial Times that members refused to put any promises to paper when he enquired about them.

Banga also criticised Facebook for promoting the project as a benevolent effort to empower the more than one billion people without access to a bank account: “It went from this altruistic idea into their own wallet. I’m like: ‘This doesn’t sound right’,” he said. “For financial inclusion, the government has got to pay you in [a currency] you’ve got to receive it as an instrument you can understand, and you have to be able to use it to buy rice and cycles. If you get paid in Libra, which goes into Calibras, which go back into pounds to buy rice, I don’t understand how that works.”  

While Mastercard has shown some interest in blockchain, including sponsoring a blockchain-based cross-border payments platform, it has been largely cautious about the technology. In July 2018, Banga characterised anonymous cryptocurrencies as “junk” which did not deserve to be considered a medium of exchange.

Although Facebook hope to launch Libra this year, the system is thought to not yet exist with only experimental code having been published. As well as technical hurdles, Libra faces serious regulatory hurdles from government agencies around the world, including with French and German officials threatening to block the launch of the service in Europe.

Facebook announced the Libra project in June 2019: a payments system which it hoped would be used by billions of people to make easy online payments. The system uses a digital wallet (Calibra) and digital currency (Libra), which would be tied to real-world assets for stability. Facebook planned for the system to be incorporated into its own social media platforms (similar to Wechat incorporating WePay) as well as being accessible through other platforms and a dedicated app.

Although Facebook initially revealed an impressive 28-member ‘Libra Association’ led by its subsidiary Calibra, the association quickly suffered an ugly discharge of supporters, with Mastercard, Visa, eBay, Stripe, and others ditching the project. Vodafone became the latest member to leave the Libra Association in January. Twenty founding members remain committed.

Banga has spoken publicly for the first time about Mastercard’s withdrawal from the ambitious project. Mastercard pulled out of the Libra project in October 2019, just days ahead of its inaugural meeting. According to Banga, the company pulled out after concerns arose over the project’s business model and issues surrounding compliance.

He told the Financial Times (£) that there were no obvious means for Libra to become profitable; according to promotional material, all transactions will be free or very low cost.

“When you don’t understand how money gets made, it gets made in ways you don’t like,” he said. He hinted at concerns about Fakebook’s track record on data privacy; the company has aggressively gathered user data by almost any means necessary in order to develop extremely precise ad-targeting tools.

Another red flag was the reluctance of Libra Association members to commit to know-your-customer, anti-money-laundering controls, or data-management controls. Banga told the Financial Times that members refused to put any promises to paper when he enquired about them.

Banga also criticised Facebook for promoting the project as a benevolent effort to empower the more than one billion people without access to a bank account: “It went from this altruistic idea into their own wallet. I’m like: ‘This doesn’t sound right’,” he said. “For financial inclusion, the government has got to pay you in [a currency] you’ve got to receive it as an instrument you can understand, and you have to be able to use it to buy rice and cycles. If you get paid in Libra, which goes into Calibras, which go back into pounds to buy rice, I don’t understand how that works.”  

While Mastercard has shown some interest in blockchain, including sponsoring a blockchain-based cross-border payments platform, it has been largely cautious about the technology. In July 2018, Banga characterised anonymous cryptocurrencies as “junk” which did not deserve to be considered a medium of exchange.

Although Facebook hope to launch Libra this year, the system is thought to not yet exist with only experimental code having been published. As well as technical hurdles, Libra faces serious regulatory hurdles from government agencies around the world, including with French and German officials threatening to block the launch of the service in Europe.