A lot of people have forgotten, but Mark Zuckerberg actually blew up a Mario Draghi party once. It was June 18, 2019, and the then President of the ECB had invited leading monetary politicians and scientists to the Portuguese city of Sintra – to the elite forum of monetary authorities. Then the news broke that the Facebook founder also wanted to work in currencies in the future: the idea of Libra was born, billions of Facebook members worldwide could spurn euros and dollars and replace them with the Zuckerberg silverling. A nightmare for the central bankers – who seemed pretty duped that day.
But now it’s over. Zuckerberg says goodbye to his ambitions for a price-stable digital currency the news agency Bloomberg. According to the report, everything is to be sold. When asked, Meta only states that it does not comment on the report. This is not a denial.
Zuckerberg is said to have ended meetings in the past with the exclamation “Dominance”, he admires the Roman Emperor Augustus Caesar and once said in Latin that the rival Google Plus had to be destroyed. No project is too ambitious for him, no project too presumptuous – Diem could also have failed due to megalomania.
A lot has happened since Facebook presented Libra in the summer of 2019. The group wants to leave old problems behind with the new name Meta, the currency is now called Diem and has hardly anything to do with Libra. Business IT specialist Sarah Spiekermann described the advance in the SZ as a “global economic revolution” and warned: “If the European governments do not impose tough service conditions on the Libra Association within the next six months, they will have to watch as the money power in Europe dwindles .”
And so it happened: The fear of losing power released energies. The G-7 countries had a report drawn up that revealed the dangers, and the ECB immediately started planning a digital euro. In their 2020 report, monetary authorities warned that private money like Libra could endanger Europe’s sovereignty – financially, economically and politically. Zuckerberg pushed the ECB to develop its own digital currency.
At the same time, politicians put strong pressure on Facebook with strict legal requirements for the implementation of the project. Politicians may have watched for 15 years as Facebook advanced from a student start-up to the most powerful communication platform – but when it came to the state monopoly on money, the states drew their guns.
Important allies dropped out after a few months
Facebook was prepared to reject it, but the quick and decisive reaction from the financial world threw the whole project into a lurch. Facebook had acquired more than two dozen large companies and payment service providers as partners, but important allies, including Mastercard, Visa, Ebay and Paypal, jumped out after a few months.
While support waned, pressure from regulators and central banks remained, and Libra continued to shrink. Libra was never a real cryptocurrency, since the Libra Association watched over the underlying blockchain as a kind of central bank and only members of the consortium could mine money on it. The digital money, intended for the whole world and linked to different currencies and government bonds, became what is known as a stable coin, the price of which is firmly linked to the US dollar. The project was renamed Diem, moved from Geneva to the USA, and finally Facebook’s crypto boss David Marcus left the company.
None of that helped. Today, all that remains of Facebook’s attempt to revolutionize the currency system is the Novi digital wallet. This allows users in the USA and Guatemala to store and send money in the form of a stablecoin. Novi chose the Pax Dollar. You won’t find your own digital currency Diem in Meta’s wallet. The company blog last mentioned Novi in May 2020. The group does not want to comment on questions about the future of Novi.
With its own currency, Meta would finally have become a state. Its platforms have more users than countries have inhabitants, and the group’s revenues exceed the gross domestic product of some economies. The case law is also largely in Meta’s hands, with the Oversight Board there is even a kind of constitutional court. If the Bloombergreport is correct and Meta wants to dump the Diem Association, Zuckerberg will have to retire from his career as a central banker.