20 IDEAS THAT WILL SHAPE THE 2020stesting versions of dollar-
pegged digital curren-
cies. And many observers
believe it’s only a matter of
time before Google, Ama-
zon, Microsoft, and other
tech giants advance digital
currency proposals of their
own, though they have
been mostly quiet about
their interests to date.
While the private sector
may be waiting to see how
Libra shakes out, central
bankers have been shocked
awake. Plans by the Peo-
ple’s Bank of China to issue
a digital renminbi were
imminent at press time.
The Bank of France plans
to run a blockchain-based
digital currency pilot in the
first quarter of 2020. Task
forces assembled by the
European Central Bank,
Canada’s central bank, and
others are accelerating
their research and develop-
ment timelines. And over
the summer, Mark Carney,
the Bank of England’s
outgoing governor, called
for a “synthetic hegemonic
currency” backed by a
basket of international
currencies—like Libra, but
run by central banks.
One thing is certain: All
the interested parties, pri-
vate and public, have had a
fire lit under them. “What
Libra indicates is how
quickly things are moving
now,” says Gabriel Söder-
berg, a senior economist at
Sweden’s Riksbank, which
has been exploring the
feasibility of an e-Krona
since 2017. “It really shows
central banks that time
isn’t waiting for anyone.”
And time, as any business
leader knows, is money.that Facebook “probably
should have done that out
of the gate ... it would have
basically eliminated a lot of
those sovereignty questions.”5.
WHAT’S NEXT IN THE
CURRENCY RACE?
T
O GET A GREEN light
to launch as a cur-
rency, Libra needs
to satisfy regulators that it
isn’t a coup by the private
sector to usurp authority
over money—and that it
will be stable enough to
avoid precipitating a world-
wide financial crisis. One
way the Libra Association
aims to prove itself is by
promising a “fully backed”
reserve. Every Libra coin
in circulation would be
backed by low-risk assets
of equal value, made up of
various currencies, as well
as short-term government
Treasury bills. (Members
of the Libra Association
would put up the initial
assets, at a minimum buy-
in of $10 million.)
A fully backed reserve
would theoretically make
Libra less vulnerable to
a panic. Marcus notes
that much of the “money”
people use today—checks,
credit cards, loyalty points—
is backed by far fewer
real reserves. “There’s
more money creation in a
Baskin-Robbins gift card
than in Libra,” he says.
Regulators outside the
U.S. will soon weigh in on
Libra’s merits. The Libra
Association says it will
apply soon for a license
as a payment system
with FINMA, a financial
regulator in Switzerland.
Crucially, in April, a task
force assembled by the Fi-
nancial Stability Board, an
international body in Basel,
Switzerland, will offer a
preliminary version of a pa-
per on the risk to financial
stability posed by “global
stablecoins” like Libra.
The Treasury Department
and the EU have similar
reviews underway.
A thumbs-down from
any of these bodies mightPut on a new suit of clothes
and get into heaven?” But
others are more open to
experimentation. Rep.
Patrick McHenry (R-N.C.),
Sherman’s colleague on the
House financial services
committee, describes the
sovereignty fears of his
peers as “hyperventilation.”
He believes Libra is “likely
to launch.” And he adds:
“We should not be directly
legislating a business into
or out of existence.”
While it waits, the as-be fatal. But if Libra gets
approvals, expect smaller
rollouts in specific coun-
tries rather than a grand,
world-conquering unveil-
ing. The association will
likely look to friendly
locales for pilot tests, with
Switzerland, Singapore,
and emerging economies in
Southeast Asia and Africa
as candidates.
In the U.S., Congress will
get a say—and there, some
critics, skeptical of Big Tech
in general, will likely stay
implacable. Asked whether
the Libra partners could
do anything to assuage
his concerns, Rep. Sher-
man erupts into uproari-
ous laughter, then retorts:
“What could Beelzebub do?sociation is searching for a
managing director and is
aiming to bring its mem-
bership ranks up to 100 or-
ganizations. Marcus hopes
for a 2020 rollout, but
acknowledges, “The ball is
not really in our court.”
If Libra remains stymied,
it’s likely someone else will
quickly step up in its place.
PayPal, a Libra deserter,
is eyeing digital currency
partnerships, according
to someone familiar with
its plans. Financial ser-
vices startups like Square,
Robin hood, and SoFi have
thrown their weight behind
more decentralized crypto-
currencies, like Bitcoin.
Banks such as JPMorgan
Chase and Wells Fargo are64
FORTUNE.COM // JANUARY 2020
What Libra indicates is
how quickly things are mov-
ing now” in digital currency,
says one economist. “Time
isn’t waiting for anyone.”