PayPal, one of the future members of Libra’s management consortium, is cautious about the future of Facebook’s virtual money project, which is scheduled for mid-2020, but is facing increasing opposition from regulators.
“This is a non-binding commitment (for PayPal),” says Gabrielle Rabinovitch, Director of Investor Relations at PayPal. “And of course, I think there is still a lot of work before we get to the stage where it becomes more than an exciting idea.”
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Facebook entrusted the governance and management of Libra to an independent entity, based in Geneva (Switzerland) and composed of companies like Mastercard and Visa or PayPal. Each must invest at least $ 10 million in the project.
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Libra is expected to offer from 2020 a new payment method outside traditional banking channels: it is the cornerstone of a new ecosystem, a tool likely to interest those excluded from the banking system, in emerging countries for example, or migrants who send money to their loved ones in their country of origin.
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These transfers accounted for $ 529 billion in 2018, according to the World Bank. PayPal is present in this sector, especially since the acquisition of Xoom in 2015, which facilitates this type of transfer at prices lower than those of traditional institutions (banks and post offices).
“Libra’s goals and ambitions are in line with PayPal’s general ambition to help those who are least served and to democratize access to capital,” said Gabrielle Rabinovitch.
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But the project provokes an outcry from some states and regulatory authorities, worried by the bad reputation of Facebook in terms of confidentiality and protection of personal data.
The size of Facebook, the world’s first social network with 2.7 billion users if we understand all its applications (WhatsApp, Messenger), also implies that the new Libra currency could disrupt the global financial system and make the task more difficult for central banks.
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“The emerging regions are also those where the political pressures are the strongest,” says Gabrielle Rabinovitch. “So I do not know if it will ever be a global solution. Libra should be better than existing currencies today. ” “The road is long before it is a real substitute (to existing systems) at the global level,”.