Bruno Le Maire says it is ‘out of the question’ that Libra be allowed to become a sovereign currency
Facebook’s plan to launch a global currency to serve the world’s unbanked is already facing severe scrutiny over how it will be used, with European officials claiming it risks becoming a “shadow bank”.
France’s Finance Minister Bruno Le Maire called for central bank governors to make assurances that the new Libra cryptocurrency will face appropriate regulation to avoid it being used as a tool for money laundering and financing terrorists.
Speaking on Europe 1 radio, Mr Le Maire said it was “out of the question” that Libra be allowed to become a sovereign currency. “It can’t and it must not happen,” he said.
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Other figures to raise concerns about Libra included Markus Feber, a German member of the European Parliament, and Bank of England Governor Mark Carney.
“Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation,” Mr Carney said at the European Central Bank’s annual symposium in Sintra, Portugal.
With more than 2 billion users around the world, Mr Ferber added that financial regulators should work to ensure Facebook does not become a “shadow bank”. He said companies “must not be allowed to operate in a regulatory nirvana when introducing virtual currencies”.
The decentralised and semi-anonymous nature of the current crop of cryptocurrencies – led by bitcoin – mean they have previously been blamed for offering a way for criminal and terrorist organisations to transfer funds across borders.
A 2015 report by web-intelligence firm S2T found that Isis was using bitcoin for fundraising and supporting US-based terror cells.
Facebook’s new cryptocurrency is backed by 27 other companies – including PayPal, Mastercard and Visa – and will be spent via Facebook’s stable of apps that include Messenger and WhatsApp.
This means there will be more scrutiny and transparency than traditional cryptocurrencies, though it remains to be seen how Libra will be regulated.
A Facebook spokesperson told : “We look forward to responding to policy makers’ questions as this process moves forward.”
Libra is set to launch at some stage in 2020.
French Economy and Finance Minister Bruno Le Maire said it was ‘out of the question’ that Libra becomes a sovereign currency (AFP/Getty Images)
Other criticism levelled at the Libra cryptocurrency is that it could be used as an “invasive and dangerous” form of surveillance.
Cryptocurrency expert Phil Chen, who pioneered HTC’s first blockchain smartphone, said it could give the technology giant unprecedented access to its users’ data.
“If you’re concerned with Facebook knowing too much or having too much access to your private data, Libra will give Facebook even more direct access to your financial information,” Mr Chen said.
“This will easily become the most dangerous antitrust case in history.”