Money, Currency or Crypto Currency: What Exactly is Libra? An Economic Classification

Philipp Sandner
6 min readAug 24, 2019

While Libra has raised wide attention, there is actually a lack of understanding what it really is. We propose that Libra can be classified as money, since the three functions of money, namely 1) medium of exchange 2) unit of account and 3) store of value, might be fulfilled after introducing Libra. Using a taxonomy of money to further classify Libra, it can be seen as a peer-to-peer, not central bank-issued, electronic kind of money. Note the difference to classical crypto currencies as Bitcoin, that it is not universally accessible. All in all, the term “wholesale crypto currency” applies for Libra. Calling Libra “currency” depends on the underlying definition of a currency. — Authors: Simon Seiter, Philipp Sandner, Jonas Gross

To understand the implications of introducing Libra it is essential to understand first, what Libra actually is from an economic point of view. Are we talking about a form of currency, money, crypto currency or maybe something completely different?

In the whitepaper, Libra is claimed to be all together, a currency, money and a crypto currency. In the ongoing debate, these terms are often used synonymously, even if they are not.

Is Libra a currency?

In economics there is no general consensus on what a “currency” exactly is. Some of the major textbooks actually lack an explicit definition. 1) Currency is often seen as “the money that is used in a particular country at a particular time.” 2) Alternatively, the Liechtenstein Blockchain Act states in its English translation that “Money is the umbrella term for all forms of payment and exchange that are widely recognised, while currencies are defined as legal means of payment that must be accepted in a country.” Depending on the exact definition, Libra can then be called currency (or even not). Following 1), every kind of money would be a currency, and following 2) Libra would not be a currency as it is not accepted by a state as a official means of payment. At this point, not a single crypto currency is (and for the foreseeable future will be) a currency in the meaning of being accepted by a state.

Is Libra money?

Speaking correctly in economic terms, we can call Libra “money”. According to the widespread definition, money has to fulfill three important functions to be classified as money. It needs to be a 1) medium of exchange 2) unit of account and 3) store of value. All of the three properties can be — from the perspective of today — expected to be fulfilled in Libra. It will function as a means of payment since it can be assumed to be widely accepted — at least by its partner companies such as Facebook, Paypal, Visa or Mastercard. The more companies offer Libra payments, the more not yet in the consortium included companies might follow. And when the partner companies, like Uber or Spotify, might calculate their prices — besides in fiat currencies — also in Libra the function as a unit of account would be fulfilled, as well. Libra is designed to be economically stable on a global basis (through a currency and security basket) and therefore asset-backed (by the Libra Reserve). This makes Libra (more or less) stable: it will never be completely stable to a single currency (in difference to stable coins) but it will be relatively stable to the whole foreign exchange market in total. Hence, it can be expected to be a (relatively stable) store of value — even if not a perfect one.

What kind of money is Libra?

Now, we know that Libra can be expected to be classified as “money”. However, there are myriads of forms of money. The Bank for International Settlements (BIS) has developed a taxonomy of money, the so called “money flower”. They use the following dimensions to classify money: Issuer (central bank or other), form (electronic or physical), accessibility (universal or limited) and transfer mechanism (centralized or peer-to-peer).

According to the money flower, cash can be classified as central bank issued, physical, universally accessible, peer-to-peer. Libra, on the other hand, qualifies as peer-to-peer — since it can be transferred directly — electronic kind of money. However, it is not universally accessible, since clients can be excluded from buying Libra. Besides, it is not central bank-issued, but issued by the private Libra Association. All in all, the term “wholesale crypto currency” applies for Libra in the context of the money flower. Note the difference to other crypto currencies, as Bitcoin, that access can be denied to specific clients.

To sum it up, while one can debate whether Libra is a currency, we would safely call it money. Libra is issued by the Libra Association which is important to differentiate from both “regular money” (where central banks are the issuers) and “regular cryptocurrencies” (where no institution issues the money) — it is rather something in between. For this reason Libra could most precisely be called a wholesale cryptocurrency or private crypto money.

Figure 1: Classification of Libra in the “Money flower taxonomy” developed by the BIS (source: similar to BIS, 2017)


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Simon Seiter is a Senior Consultant at Commerz Business Consulting (Commerzbank’s inhouse consultancy) and working for more than two years on DLT use cases within capital markets and cash / payments. Amongst other projects, at last he lead the first DLT security transaction worldwide with both security and cash on ledger, together with the large German industry corporates Continental and Siemens. He is further part of several working groups on national and European level and consulting political bodies as well as clients with regard to DLT use cases. You can contact him via Mail (, via LinkedIn ( or via Twitter (

Prof. Dr. Philipp Sandner has founded the Frankfurt School Blockchain Center (FSBC). From 2018 to 2021, he was ranked among the “top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. He has been a member of the FinTech Council and the Digital Finance Forum of the Federal Ministry of Finance in Germany. He is also on the Board of Directors of FiveT Fintech Fund and Blockchain Founders Group — companies active in the field of blockchain startups. The expertise of Prof. Sandner includes crypto assets such as Bitcoin and Ethereum, decentralized finance (DeFi), the digital euro, tokenization of assets, and digital identity. You can contact him via mail ( via LinkedIn or follow him on Twitter (@philippsandner).

Jonas Groß is a project manager and research assistant at the Frankfurt School Blockchain Center (FSBC). His fields of interests are primarily cryptocurrencies. Besides, in the context of his PhD, he analyzes the impact of blockchain technology on the monetary policy of worldwide central banks. He mainly studies innovations as central bank digital currencies (CBDC) and central bank cryptocurrencies (CBCC). You can contact him via mail (, LinkedIn ( and via Xing (



Philipp Sandner

Professor | Lecturer | Author | Investor | Frankfurt School Blockchain Center