In June, Facebook shocked the world with a brief announcement entitled Coming in 2020: Calibra. It revealed the social media’s giant’s plans to create a new currency called Libra, a move which could threaten the global banking system. Some see Libra as an evil plan for world domination by Facebook CEO Mark Zuckerberg, while others have hailed it as a great development that can’t come soon enough. So what exactly is Libra, and how might it affect you? Is Facebook Libra real money? When it is released in 2020, Libra will be a new digital coin, a cryptocurrency like Bitcoin. Libra is designed to make it easy to send money anywhere in the world instantly and with very low fees. Over time, however, it will also become widely used to pay for things. To use this digital money, you’ll also need a digital wallet. Facebook will provide a wallet app called Calibra, but other companies will also release their own Libra wallets too. So, yes you will be able to buy and sell goods and services using Libra but obviously that doesn’t convince the US President. “Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” the President tweeted on 11 July. “We have only one real currency in the USA, … It is called the United States Dollar!” Who owns Facebook Libra? A team at Facebook created Libra, but it will be run by an organisation called the Libra Association, a not-for-profit based in Switzerland. The Association already has around 30 members, who include well-known tech firms such as Uber and Spotify, as well as traditional companies like Visa, Mastercard and Vodafone. Facebook says there will eventually be over 100 Association members, and they will run Libra together. Who is Facebook Libra for? Facebook’s announcement suggests Libra is aimed at making the world a better place by helping the world’s ‘unbanked’: “Almost half of the adults in the world don’t have an active bank account and … approximately 70 per cent of small businesses in developing countries lack access to credit…this is the challenge we’re hoping to address.’’ However, Facebook is also hoping Libra will be used by consumers around the world, including in Australia. What can I buy with Facebook Libra? From the outset, you’ll be able to buy Libra and send them to almost anyone with a smartphone, as quickly and easily as you send a text message and at very low cost. In time, Facebook says, users will also be able to do things like pay bills with the push of a button, buy a cup of coffee and perhaps even access financial services such as a home loan. Since companies like Uber are members of the Libra Association, it’s likely you’ll be able to pay for their services using Libra. All this will mean more commerce across Facebook’s apps, which means more ads—Facebook’s source of income. Will Libra replace the Aussie dollar? You’ll always need the Aussie dollar unless our government chooses to accept payments in Libra. That won’t happen any time soon, if indeed ever. In fact replacing sovereign currencies is not the goal of Libra because it will be pegged to a basket of major currencies, such as the US dollar and the euro, to keep it stable. This stability is vital to the success of Libra. The volatility of other cryptocurrencies such as Bitcoin has been a big hurdle to their adoption, because nobody wants money that varies wildly in value. This stability also means that holding and trading Libra like shares or Bitcoin in the hopes of making a profit when its value climbs won’t make much sense. Should I trust Facebook Libra? That depends who you ask. US President Trump has expressed his firm opinion – No. Nobel Prize-winning economist Joseph Stiglitz is also in the ’no’ camp. “Only a fool would trust Facebook with his or her financial wellbeing,’’ Stiglitz says. But Facebook points out it will not be in charge of the currency, as it will be one of over 100 Libra Association members by the launch and will not have control of the group. It says Libra will use all the same security processes that banks and credit cards use—and if someone fraudulently gains access to your account and steals your Libra, you will be given a refund. Could I get an Australian home loan in Libra? Facebook has said that it’s long-term goal is to offer financial services such as loans using Libra. So perhaps one day you will be able to get an Australian home loan in Libra, and then either purchase your property directly in Libra or convert it back into Aussie dollars to do so. But whether that ever happens will depend on whether governments ever allow Libra to take off. Right now, Facebook is facing a backlash from regulators and authorities around the world who are either calling for it to be banned, restricted or at least thoroughly investigated before it is launched. US and European politicians have expressed concerns, and a coalition of more than 30 groups has asked the US Congress to impose a moratorium on Libra until “profound questions” are answered. Sceptics include the Reserve Bank of Australia’s governor, Philip Lowe. “There are a lot of regulatory issues that still need to be addressed’’ before Libra is used in Australia, Lowe says. With so many great Aussie home loan deals available today, there’s no need to wait for Libra. Whether you’re buying, investing or refinancing, see InfoChoice’s comparisons of the best home loans in Australia. The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.