Adoption of Libra as a Digital Currency in Thailand

Introduction

Cash or fiat currencies have been dominant in the money exchange and monetary system in every country worldwide; nevertheless, because of the rapid development of the internet and financial technologies (FinTech) in the recent decade, many countries are adopting the concept of a cashless society in which cash payments are transformed into electronic forms. For example, electronic money is used via mobile applications, such as WeChat and Alipay in China, to conduct online financial transactions (Brunnermeier et al., 2019). Today, conducting online financial transactions has been gaining popularity as online banking services and e-money offer ease of use, high security in the banking system and 24-hour availability (Mahesh Kumar et al., 2017). However, this exchange method still has limitations. First, a high fluctuation in foreign exchange rates still remains in the exchange system of e-money since digital money is an electronic form of cash and still depends on the exchange rate of fiat currencies. Second, many people cannot access digital financial transactions due to many reasons, such as a lack of technological skills, no internet access or no electronic device such as a mobile phone or computer. In addition, cybercrimes and insecure online platforms can create fear among internet users, so many people are afraid of conducting online financial transactions. Hence, cash remains popular as a medium for purchasing goods and services.

Nevertheless, due to the limitations of fiat currency and e-money, cryptocurrencies have gained popularity among investors globally. Since customers prefer less time-consuming services and many businesses have shifted to online-based services with the adoption of mobile-based technology to expand their customer bases, there has been a dramatic rise in financial transactions conducted via online platforms. As a result, the demand for digital currencies and the blockchain technology market has increased significantly. The payment system of many ecommerce businesses tends to accept the most popular digital coin as conducting online financial transactions by cryptocurrencies could reduce time-consuming verification processes and offer less transaction costs and fees (Li, 2017). Anonymous transactions in digital coins, in which the dependence on the authorities’ operation is not required, attract a number of users to digital currencies, for instance, the acceptance of cryptocurrencies for payment in various online drug marketplaces (Bucko et al., 2015; Perrin, 2017).

In 2019, Libra, a brand-new cryptocurrency created by Facebook, was introduced. Facebook stated that Libra would be a medium of economic exchange for people worldwide and would become a global currency once launched (Libra Association, 2021). Libra was created to overcome the obstacles of traditional exchanges and conducting financial transactions, because people can exchange Libra coins and conduct financial transactions through Libra via a wide range of reliable online platforms; hence, doing so can save time in conducting financial transactions, reduce the risk of cybercrimes and expand access to financial services (Libra Association, 2021). Since Libra coin has a stable value, fully backed by a range of the world’s currencies in bank deposits, their prices will have low volatility and be quite stable (Abent, 2019). Furthermore, Libra Association, a non-profit organisation as an assigned third party, will govern Libra for transparent administration: so far, there are 28 founding members in Libra Association, including Spotify, Uber, Vodafone, Coinbase and Anchorage (Libra Association, 2021). Calibra is a digital wallet for every single Libra user and all Libra’s transactions must be conducted via Calibra (Fisher, 2019). The Libra project was expected to be launched and operating by 2020 (Abent, 2019).

Despite a number of advantages in Facebook’s Libra, Libra caused scepticism about whether it will allow Facebook to become a financial dictatorship (Aránguez Díaz, 2020). This concern has existed since Facebook was convicted of selling users’ information and violating privacy practice by the US Federal Trade Commission in 2011 and many sectors still have concerns about Facebook’s privacy (BBC, 2019). Furthermore, many banking and financial experts from various financial institutes worry that the significance of banks and other traditional financial institutes as the dominant financial services could be reduced by the operation of Libra (Schroeder, 2019; Hobbs, 2020). These problems have caused the rejection of Libra in many countries. Therefore, if Facebook intends to achieve its goal in making Libra a global currency, Facebook has to overcome these obstacles to obtain the approval of worldwide governments (Wachananon, 2019).