Facebook’s Libra currency abandoned by major financial companies

France and Germany last month pledged to block the digital currency Libra from operating in Europe. (AFP)
Updated 12 October 2019

Facebook’s Libra currency abandoned by major financial companies

  • The latest exodus leaves the Libra Association without any remaining major payments companies as members
  • France and Germany last month pledged to block Libra from operating in Europe

Facebook’s ambitious efforts to establish a global digital currency called Libra suffered severe setbacks on Friday, as major payment companies including Mastercard and Visa Inc. quit the group behind the project.
The two companies announced they would leave the association Friday afternoon, as did eBay, Stripe and Latin American payments company Mercado Pago. They join PayPal Holdings Inc. which exited the group a week ago, as global regulators continue to air concerns about the project.
The latest exodus leaves the Libra Association without any remaining major payments companies as members, meaning it can no longer count on a global player to help consumers turn their currency into Libra and facilitate transactions.
The remaining association members, including Lyft and Vodafone, consist mainly of venture capital, telecommunications, blockchain and technology companies, as well as nonprofit groups.
“Visa has decided not to join the Libra Association at this time,” the company said in a statement. “We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.”
Facebook’s head of the project, former PayPal executive David Marcus, cautioned on Twitter against “reading the fate of Libra into this update,” although he acknowledged “it’s not great news in the short term.”
Libra will press ahead with plans to formally charter the association in three days despite the setbacks, Dante Disparte, its head of policy and communication, said in a statement.
“We are focused on moving forward and continuing to build a strong association of some of the world’s leading enterprises, social impact organizations and other stakeholders,” he said.
“Although the makeup of the Association members may grow and change over time, the design principle of Libra’s governance and technology, along with the open nature of this project ensures the Libra payment network will remain resilient.”
Facebook announced plans to launch the digital currency in June 2020 in partnership with other Libra Association members. Almost immediately afterwards, the project faced relentless scrutiny from global regulators, who said it raised a host of serious questions that the group had yet to answer.
France and Germany last month pledged to block Libra from operating in Europe and backed the development of a public cryptocurrency instead. And US Federal Reserve Chairman Jerome Powell suggested the project could not advance before addressing serious privacy, money laundering, consumer protection and financial stability concerns that must be addressed.
The rapid succession of exits by major financial companies Friday afternoon suggested that scrutiny was taking its toll.
Three days earlier, a pair of senior Democratic senators wrote to Visa, Mastercard and Stripe, telling them to be wary of “a project that will foreseeably fuel the growth in global criminal activity.”
“If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all activities,” Senator Sherrod Brown and fellow Democratic Senator Brian Schatz wrote in the letters.
Brown said in a statement after the announcements on Friday that the companies had been “wise to avoid legitimizing Facebook’s private, global currency.”
Facebook Chief Executive Mark Zuckerberg is scheduled to discuss the project when he testifies before the US House Financial Services Committee on Oct. 23. US Representative Maxine Waters, who chairs the panel, has repeatedly called on Facebook to shelve the project.


Egypt’s sovereign wealth fund to raise authorized capital five-fold up to $62.15 billion

Updated 12 November 2019

Egypt’s sovereign wealth fund to raise authorized capital five-fold up to $62.15 billion

  • Egypt’s parliament passed a law allotting 5 billion Egyptian pounds of start-up capital for the fund last year
  • Abdel-Fattah El-Sisi: Egypt could dramatically expand the size of its new sovereign wealth fund to ‘more than several trillion pounds’

CAIRO: Egypt’s sovereign wealth fund is expected to increase its authorized capital to up to a trillion Egyptian pounds ($62.15 billion) from 200 billion pounds within three years, depending on investors’ appetite, the fund’s executive director said.
Last year, Egypt’s parliament passed a law allotting 5 billion Egyptian pounds of start-up capital for the fund, called the Egypt Fund, with 1 billion pounds to be transferred immediately from the treasury.
The law also allows the president, who picks the board of directors, to transfer the ownership of any unused state assists to the fund or to any of the fund’s assists or companies.
“We expect to increase our licensed capital within three years to a trillion pounds or less ... it all depends on the investors’ response and investment appetite,” said Ayman Soliman, the fund’s chief executive.
“The sectors we will work in include industry, traditional and renewable energy, tourism and archaeology,” Soliman said.
President Abdel-Fattah El-Sisi said last month that Egypt could dramatically expand the size of its new sovereign wealth fund to “more than several trillion pounds,” and that it “aims to contribute to sustainable economic development through management of its funds and assets.”
The fund plans to buy a stake of about 30 percent in power plants built by Siemens, Soliman said, adding that six international investors have expressed interest.
“So far, six companies submitted offers to the Electricity Holding company to buy shares in the Siemens power plant,” Soliman said.
The plants, billed at the time as the world’s biggest, were built by Siemens in a €6 billion ($6.61 billion) deal signed in 2015. El-Sisi inaugurated them last year.
In May, Electricity Minister Mohamed Shaker said that the government is considering selling the power plants to private investors, but talks were still at an early stage.