Facebook’s Libra Coin Met with Skepticism in Europe
European central bankers and politicians were wary about the promises of Facebook’s upcoming digital coin.
European politicians and central bankers are wary about Facebook’s potential to displace national currencies, reported Bloomberg.
French finance minister Bruno Le Maire stated it would be “out of the question” for Facebook’s Libra Coin to act as a national currency and that the social media giant would have to give some guarantees. Le Maire also urged the Group of Seven national bank governors to prepare a special report on Facebook’s coin for their meeting in July.
Markus Ferber, European Parliament member, also expressed similar concerns. With upward of 2 billion potential users for the payment services, Facebook may become a “shadow bank”, serving international remittances without a bank’s oversight and rules.
In the past, the European Central Bank has expressed concerns that alternative systems of value and payment could usurp the monetary policy in the Eurozone. It is unknown what impact Libra will have, as the coin does not even have a pre-set supply, and will be created and destroyed based on demand. In theory, Libra will only reflect currency reserves, and not create a monetary policy of its own.
“Multinational corporations such as Facebook must not be allowed to operate in a regulatory nirvana when introducing virtual currencies,” said Ferber.
The European Union rules are quite conductive for trading cryptocurrency, and so far no bans have been implemented. However, the European Central Bank discouraged Estonia from launching Estcoin, a national token-based currency, since the country is a part of the Eurozone.
Libra has called itself a “global currency”, although the question is still out on the role of digital assets:
The #Libra Association is today announcing plans for a simple global currency and financial infrastructure. Find out more https://t.co/VPS7LllcNn #blockchain #cryptocurrency pic.twitter.com/mdHymhsrcH
— Libra (@Libra_) June 18, 2019
In this regard, European central bankers and politicians see the word “currency” as entailing a form of sovereignty and possibly an independent monetary policy. So far, Facebook has denied to have such goals, using the word “currency” merely as a means of payment.
The biggest worries surrounding digital assets remain the possibility for anonymous terrorism financing, as well as money laundering. European law does not allow the transfer of significant sums through fintech applications without thorough identity evidence. The aim of Facebook is to create a worldwide network of merchants and other backers, and essentially offer a fintech solution based on a blockchain and a distributed ledger.
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