Facebook Wants To Manage Your Finances - Is It To Be Trusted?

Facebook Wants To Manage Your Finances - Is It To Be Trusted?874
source: Pixabay

Facebook unveiled Tuesday a new ambitious business plan - to launch a new cryptocurrency in the first half of 2020. The upcoming Bitcoin competitor, called Libra, will also be for global use, noted from the company, highlighting it would make sending money as easy as sending a photo.

The social media giant teamed up with 27 partners, among which PayPal, Uber, Spotify, Visa, and Mastercard, to establish the Geneva-headquartered Libra Association. The newly-formed entity would be in charge of governing the new digital coin.

On the other side of the pond, in Menlo, California, Facebook created a subsidiary called Calibra to offer digital wallets. Calibra's digital wallets will be connected with Messenger and WhatsApp to let users save, send, and spend Libras.

In an interview with The Associated Press, Facebook executive David Marcus outlined the main goals of Libra, pointing out it would provide international money transfers without imposing 'significant fees.' 

In addition to that, Libra would give access to online commerce to a considerable number of people worldwide who still do not have a bank account or a credit card. Facebook is now focused on raising as much capital as possible, targeting at USD 1 billion from existing and prospective partners.

Marcus also highlighted that Calibra users would not be required to have a Facebook account to create a free digital wallet. It the beginning, it would be possible to send Libra back and forth on WhatsApp and Messenger, added Marcus, saying that Instagram would join at a later stage.

Furthermore, some of Facebook's partners on the Libra project would create numerous incentives to attract consumers and merchants. For instance, Uber would offer discounts to Libra payers.

Another core goal of Facebook is not to keep Libra shrouded in secrecy and conspiracies. Facebook stated its plans to back each purchase of Libra by a  reserve fund of equal value held in traditional currencies to stabilize Libra's value and avoid potential value fluctuations.

Asked to comment on the name 'Libra,' Marcus explained it was inspired by Roman weight measurements, the French word for freedom, and the astrological sign for justice.

According to Teunis Brosens, ING's lead economist for digital finance and regulation, the latest Facebook's initiative raises some valid data privacy concerns. 

In Brosens' view, giving the Calibra app access to the social data Facebook, WhatsApp, and Instagram manage, could bring potential privacy issues.

Neil Campling, Head of TMT Research at Mirabaud Securities in London went even further pointing out that given Facebook's proven track record of serious problems with data management and privacy, it would be a 'terrible idea' to let it manage your finances.

What do you think? Do you agree with Campling's opinion that it would not be a good idea to trust Facebook manage your finances?