Facebook to launch digital wallet

Facebook said it is ready to launch digital wallet “Novi.”

The social network said the product is “ready to come to market” and that it had received regulatory approval in “nearly every” US state.

The announcement came from David Marcus, the head of F2, Facebook’s financial division.
Marcus said the Facebook team has been working on Novi for “the past two-plus years, “ and that Novi would “enable people, and eventually small businesses, to move money around domestically and internationally in a quick and affordable way.”

Novi’s underlying infrastructure, Diem Networks, is set to run as a payments system according to Marcus, using a new currency known as the “Diem Dollar”.

Novi differs from Facebook’s Libra project, as it will use transactions based on a stablecoin version of the US Dollar rather than a unique digital currency.

Stablecoins are cryptocurrencies where the price is designed to be anchored to fiat money – for example, the US dollar - or to exchange-traded commodities such as gold.

The Bank of England made a statement in June saying that Stablecoins used as money should meet the same regulatory standards as those provided by commercial bank money or bank deposits. LINK

Transactions in the financial system are increasingly less dominated by traditional fiat currencies; stablecoins and digital asset classes have generated more than $1.2 trillion in transactional volume since 2017, according to research from survey compiled by Invesco and Cambridge Judge Business School early this year.

Novi’s predecessor Libra encountered strong criticism internationally throughout its development; in November 2020, leaders of the G7 group of nations opposed the launch of Facebook’s Libra Stablecoin until it could confirm it was properly regulated.

Marcus also claimed the "broken" payments infrastructure, which he said contributes to 1.7 billion people - including 62 million Americans - being unbanked.

Marcus also highlighted the cost of cross-border payments, which he claimed were 6.5 per cent on average worldwide with end-to-end settlement times of three day.

The tech executive said he did “understand and accept the need for extra scrutiny due to our scale” and refuted claims that Facebook may have an “ominous plan.”

Marcus also dubbed criticism of non-government Stablecoins as "profoundly un-American" and that the BigTech company deserves a "fair shot".

The analyst house Juniper Research has predicted that more than half the world population will use a mobile wallet by 2025, in a study commissioned by FinTech Boku released in July.

“Novi also cannot operate in specific jurisdictions until it receives appropriate licensing and complies with local regulations and standards, so we will start in a small number of countries,” said Marcus. “The scaling of our wallet will be a long journey, one we intend to take responsibly as we know and accept that we will be held to the highest standards globally.”

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