Today Facebook announced the details of its cryptocurrency, Libra. With the announcement, it’s clear Mark Zuckerberg’s ambition is to have far more than just another online currency. He’s looking to create the world’s new Global Reserve Currency.

As Binance has reported in their in-depth report today: 

“If Libra were to be extremely used across the globe, this could (tentatively) lead to the creation of a new standard for global trade. “This global digit” can be seen as a functionable and tradable version of the SDR, proposed by the IMF.”

What is SDR? It stands for “Special Drawing Rights’ and was created b y the IMF in 1969 as a ‘reserve of reserves’. It’s based on a basket of five currencies - the US dollar, the UK pound, the Euro, the Chinese Renminbi and the Japanese yen. It's used by governments to give them liquidity and balance against currency volatility. 

But the SDR was for use only by countries, it was backed by gold, and it could not be used as a currency by the public. SDR grew rapidly until Nixon broke the conversion window in the “Nixon Shock” of 1971. That's what triggered the US dollar becoming the world’s reserve currency.

Facebook’s Libra solved the challenges SDR had - It’s based on a basket of currencies, so can also be used by countries as a reserve and hedge against volatility. But it’s far more liquid - It’s going to be used as currency by the public, it has minimum transaction cost, is on the Blockchain's distributed ledger, backed by the currencies themselves (all interest earning) instead of gold. 

Mark has made his ambition for Libra to be a global reserve clear in today's White Paper, saying: “Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets - the Libra Reserve - and supported by a competitive network of exchanges buying and selling Libra.”

“That means anyone with Libra has a high degree of assurance they can convert their digital currency into local fiat currency based on an exchange rate… This approach is similar to how other currencies were introduced in the past - to help instil trust in a new currency and gain widespread adoption during its infancy, it was guaranteed that a country’s notes could be traded in for real assets, such as gold."

As the Financial Times reported today, “Unlike the SDR system, which is capped by design, the only limit to how much Libra currency can be issued is the amount of available pledgeable assets in the global system” - (ie. all the money in the world.)

“On that basis, the Libra system has the capacity to gobble up a huge swath of global spare foreign exchange liquidity while setting up its float."

The FT goes further: “And what about the name itself? The seventh sign of the zodiac, Libra, is depicted by a pair of scaled held by Themis, the Greek Goddess of divine law and order. From the Latin libra, it means ‘a balance’ and in ancient Rome ‘libra pond' - “a pound by weight”. In fact, its where the British pound came from and why its abbreviated "£"

"We get the reference Libra is a word play: a balance of payments with a double-sided ledger that intends (finally!) to bring harmony to the International financial force."

At a time when countries are fighting over becoming the next global currency (Two years ago the IMF added the Yuan as the third reserve currency after the US dollar and Euro), Mark Zuckerberg’s ambition is to pass them all and create a reserve that is fully decentralised and not controlled by any one government - the first truly global currency.

This year is the 75th anniversary of the IMF, and the 50th anniversary of the SDR. Only one month ago, the World Economic Forum published an article “Is it time for a true global currency?’ in which they said: 

“The anniversaries of the IMF and the SDR in 2019 are causes for celebration. But they also represent an ideal opportunity to transform the SDR into a true global currency that would strengthen the international monetary system. Policymakers should seize it.”

It looks like instead of policymakers seizing it, it’s a 35 year old billionaire entrepreneur who’s seized it instead…

“Who controls the food supply controls the people; who control the energy can control whole continents; who controls money can control the world.” - Henry Kissinger