Facebook is starting a trial with its digital wallet Novi, which is supposed to allow people to send and receive money instantly and at no additional cost. With the project, Facebook wants to create a global payment network, which would significantly expand its financial services. The trial will take place on a small scale in the United States and Guatemala.
According to Facebook, 1.7 billion people worldwide do not have access to a bank account and the current financial system is failing. With Novi, everyone can do their banking “safely and at an affordable cost,” the social media company claims. Facebook will test whether all Novi systems are working, such as basic functionality and customer service. For testing, Facebook is partnering with crypto exchange Coinbase and blockchain company Paxos.
Dollar Pax
According to Novi manager David Marcus, the wallet is being tested with Pax Dollar, a cryptocurrency pegged to the US dollar. This means that the currency is backed by “real” money. Users can purchase Pax Dollar using their Novi Account, which Novi holds on hold via Coinbase. Then, Novi users can send and receive currency to other Novi users. They can immediately withdraw the amount they receive in their local currency.
controversial project
Novi is part of Facebook’s controversial project for a global digital currency, known as Libra. Regulators have criticized that Libra can undermine the influence of central banks, leading to financial instability. Facebook picked up the crypto project again earlier this year, under the name Diem. Facebook is partnering with a bank to issue a daily cryptocurrency pegged to the US dollar. The digital wallet was also renamed: instead of Calibra, it was renamed Novi.
Facebook says in the statement that it eventually wants to integrate Novi into Diem’s crypto network. It is not yet clear when Facebook plans to roll out the digital wallet worldwide.
A group of five US senators called on Facebook to shut down the entire project. Mark Zuckerberg, CEO of Facebook, wrote that cryptocurrencies linked to major currencies remain untapped territory for regulators. As a result, there are still no rules to reduce the risks to the financial stability of the so-called stablecoins Limit, the message states.
Read also: The digital euro on the road: a money expert explains how it works and how it differs from a regular euro (+)
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