The French Finance Ministry has deemed Facebook’s Libra digital currency too risky to be authorized for development in Europe.
“All these concerns about Libra are serious. I therefore want to say with plenty of clarity: In these conditions we cannot authorize the development of Libra on European soil,” Bruno Le Maire said while speaking at an OECD conference in Paris on Thursday. He cited systemic risks which the new digital coin may pose for the European market. These include financial risks, risks for the sovereignty of other nations’ currencies, and the potential for abuse of market dominance.
Representations of virtual currency are displayed in front of the Libra logo in this illustration picture, June 21, 2019. © Reuters / Dado Ruvic
Le Maire has already voiced his negative sentiment regarding the new cryptocurrency ever since Facebook unveiled the project in June. Among other things, he named issues with money laundering and terrorism financing, which could potentially arise once the coin is launched into circulation. The minister also said he had spoken with European Central Bank President Mario Draghi and Christine Lagarde, the ECB’s next chief, about creating a “public digital currency” apparently to counterpose Libra and the likes of it.
Unlike central bank-backed currencies, Libra is to be regulated by an independent non-profit organization based in Switzerland dubbed the Libra Association. As it revealed on Wednesday, the Libra Association will apply for a payments license in Switzerland in a step confirming the country has been chosen to host Libra’s main supervisory authority.
Facebook, along with 27 other companies like PayPal, Visa and Mastercard, is a founding member of the Libra Association. According to the founders, the main goal of the Libra project is to enable fast and low-cost payments and money transfers for people around the world. Facebook also previously noted the Libra is to be backed up by traditional currencies held in bank accounts, which is expected to enhance confidence in the new digital coin.
Facebook’s intention to launch its own cryptocurrency has been met with concern and skepticism in many countries, as well as in crypto circles. Prior to France, authorities in the UK, the US, and Russia had also expressed concerns that Libra could create risks for the global financial system due to uncontrolled capital flows. However, the new сryptocurrency is expected to launch on a global scale in the first quarter of 2020, if approved by regulators.