The Wall Street’s magnates since years have worried that the Silicon Valley’s giants may shake up the present finance system. And Facebook thinks that it has found a solution to this, by launching its digital currency, called Libra, in 2020.
The Mark Zuckerberg’s Facebook earlier has failed to popularize on the Finance service. And it has been the not so liking guardian of others money, and it was given a habit of beating about the bush and privacy abuses. But the new scheme of the firm has got legs. The value of Libra will be added to the basket of few major cryptocurrencies, and it will also be able to handle the large transaction volumes along with the 28 other big firms who say that they will join the consortium backing to Libra.
If Libra is adopted by the Facebook’s 2.4bn users so as to shop and to transfer the money, then Libra can turn out to be one of the world’s biggest entities in financial system. And this will herald the consumer revolution, but at the same time can also make the financial system a bit unstable by reducing the sovereignty of governments’ economic.
The Facebook’s interest on Libra can be its own survival, because a new financial utility is being tied to its social-media and to the chat customers.
But yes this digitization to the finance system promises to make the life better, easier and also cheaper for billions of people across the world. The digital payments in china are ubiquitous, where its people can transfer money to their friends and firms with the help of a chat app for almost anything. The cheques signed every year in America are of billions and the fees are up to 5% for the basic cross-border transfer. The credit-card giants who charge about 0.25% from the global transactions which take place is the threesome, and it is worth over more than $30bn for each year.
To be more specific, the big techs have made wider inroads where the provision of the payments is restricted or limited and the penetration through mobile phones is high. For example, a large crowd of the population in the present evolving market economies remains to be unbanked; this mobile phone ownership rate has made the digital delivery of the essential financial services very high, which includes even the cashless payments, to the previously unbanked households along with the enterprises which are small and medium-sized.
These inroads were mainly seen in China but it has now expanded rapidly towards south-east Asia, east Africa and the Latin America. The Financial services remains to be still a small part of the big technology business, which represents about 11% of the revenues across a sample of the big technology businesses. And it is expected to expand more in the coming years.