Facebook reconsiders Libra cryptocurrency plans

Project will government-backed currencies like the US dollar and Euro

Facebook faces significant resistance from financial regulators over its forthcoming Libra cryptocurrencyy (Reuters)

Facebook is reportedly shifting its plans to launch a new digital currency following widespread criticism of its Libra cryptocurrency project.

The technology giant will now open the payments network to support digital versions of existing currencies, such as the US dollar, Euro and pound sterling.

Since announcing the project in June last year, Facebook has faced significant pushback from global regulators.

Its ambition to create a global currency that could be received, stored and spent using just a phone was seen by some as a threat to the current financial system, despite potentially offering key services to the 1.7 billion unbanked people in the world.

In December, the Swiss president said Libra had "failed" in its current form as it would not be accepted by central banks. Several key partners have also withdrawn from the project, including Mastercard, PayPal, Stripe and Visa.

Both Bloomberg and The Information reported that the social network's digital wallet would transition to accept government-backed currencies, with the launch now expected towards the end of the year.

The platform will still support the Libra cryptocurrency, according to Facebook, who said in a statement that it "remains fully committed to the project".

Libra's head of policy Dante Disparte said in a statement: "The Libra Association has not altered its goal of building a regulatory compliant global payment network, and the basic design principles that support that goal have not been changed, nor has the potential for this network to foster future innovation."

Facebook CEO Mark Zuckerberg previously hinted at a congressional hearing in October that the network could support multiple currencies.

"I think that there's already some discussion about whether it might make sense to build the kind of digital payment system that we're talking about based on individual sovereign currencies rather than a kind of combination of these currencies into some new one," he said. "So that's something that's already being considered."

David Marcus, who heads the organisation that oversees Libra's development, outlined what such a system might look like.

"We could have a series of stablecoins: a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc.," Mr Marcus told a banking seminar in October.

"We could definitely approach this with having a multitude of stablecoins that represent national currencies in a tokenised digital form... What we care about is the mission and there are a number of ways to go about this."