Here’s how Facebook’s Libra will permanently hit Australian banks’ profits

Overnight the man in charge of setting up Facebook Inc’s (FB) digital currency, Libra, pretty much confirmed to CNBC business television that the project has one key service goal for now.

During an interview David Marcus batted back worries about the high-profile departure of some original partners including Visa, PayPal, and other tech giants to boast the project would succeed anyway.

The project’s big problem remains regulatory resistance in particular from legislators determined to protect central bank control of the money supply, with two U.S. senators even writing to the CEOs of some of the Libra Association’s original members (Visa, MasterCard, Stripe) to threaten with them regulatory beatings if they take part in the project.

The reason governments and their central bank supporters want Libra browbeaten is concern that it could end up printing or creating money in the way central banks do via the principle of fractional reserve banking.

However, Mr Marcus guaranteed during the interview that Libra will never create money.

Instead the tech guru repeatedly made clear Libra would principally be used as an exchange mechanism to eliminate overseas transfer and bank fees for users wanting to send money around the world. Or for those users simply overseas on holiday.

For example any blue-collar worker wanting to repatriate money overseas to their family would be able to avoid bank fees and the spread charged on the FX rate if the sender and receiver both had a free Libra wallet via Facebook accounts.

Or a holiday maker and Facebook user could buy Libra in Australian dollars before spending it in Thai baht in Thailand with minimal Libra transaction fees.

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