September 20, 2019 / 4:04 PM / 2 months ago

No Chinese yuan in basket underpinning Facebook's Libra - Spiegel

BERLIN, Sept 20 (Reuters) - Facebook’s planned cryptocurrency Libra will be backed by a basket of currencies including the U.S. dollar, euro, yen, sterling and Singapore dollar, but excluding China’s yuan, Der Spiegel reported, referring to a letter from Facebook.

The exclusion of China’s currency could help smooth the planned digital currency’s path in the United States, where officials have raised concerns about the yuan’s growing stature as a reserve currency at a time when trade relations between the two economic powers are tense.

In a letter responding to a question from German legislator Fabio De Masi, Facebook said the dollar would make up 50% of the basket, followed by the euro with 18%, the yen with 14%, the British pound with 11% and the Singapore dollar with 7%, according to German news magazine Der Spiegel.

Calls by Reuters to De Masi, the legislator who received the letter, were not immediately returned.

The Swiss-based Libra Association, the non-profit organisation comprising Facebook and 27 other members that plans to launch and oversee the currency, did not immediately respond to a request for comment.

Facebook’s planned Libra is the most well-known of the stablecoins, cryptocurrencies backed by assets such as traditional money deposits, short-term government securities or gold. They have the potential to be less volatile and more of a mainstream asset than existing cryptocurrencies like bitcoin.

Regulators around the world have reacted with extreme wariness to the proposal, with central bankers warning they could have a destabilising effect on the global financial system. (Reporting by Thomas Escritt; Additional reporting by Brenna Hughes Neghaiwi in Zurich; Editing by Pravin Char)

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