KBW Takes a Look at Facebook’s Cryptocurrency Mobile Payments Advancement Libra

June 21, 2019         By: Steven Anderson

Everywhere you go in the mobile payments space these days, there’s talk about Facebook and its Libra cryptocurrency, as well as the underlying technology contained therein, which is both substantial and a little unnerving. It’s really only unnerving in the implications; implications that our friends at Keefe, Bruyette & Woods (KBW) recently tackled by way of notes they sent our way about the launch of Libra and everything that launch could mean.

One of the biggest things that KBW noted about Libra was that it’s a stablecoin. It has actively taken steps to address volatility in value that have made other cryptocurrencies look less like a currency and more like an outright gamble. That could go a long way toward addressing some of the issues that cryptocurrency had, and potentially make Libra a winner in the cross-border payments space, as well as other systems.

When looking at the potential impacts of Libra on the payments ecosystem as we know it, however, one of KBW’s biggest issues is how little we know about Libra so far overall. There are, as KBW puts it, “…many variables that may ultimately determine its success or failure…”, so prediction at this point is next to impossible. However, KBW also notes that Libra could ultimately serve as a “…viable and inexpensive payments alternative….”

In the end, KBW notes that the only way Libra could achieve such success is through adoption, a tall order in places with several solutions in play already. KBW suggests that what may happen is not that Libra achieves primacy, but rather becomes a part of several incumbent operations.

All possible, of course. Those “financially underserved” parts of the world tend to have a lot of countries jammed into one space, like Africa and South America. This makes cross-border operations especially useful; when you can cross into five or six different countries from where you sit at any given time, you need to be able to operate effectively across borders. Libra could do something like that effectively, but it would still need infrastructure to support it as users convert Libra to local fiat.

Still, this is certainly an advance to watch, and may well represent one of the biggest fundamental shifts in the mobile payments market we’ve seen yet.