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Facebook’s new crypto project, Libra, is already facing severe pushback in Europe, just one day after cryptocurrency’s whitepaper was released. Political and financial leaders are calling for tighter regulation of the social media giant given the implications of Libra becoming an independent sovereign currency.
In an interview on Europe 1 radio, French Finance Minister Bruno Le Maire warned against branding Libra as an independent and sovereign currency. He insisted that Facebook’s cryptocurrency should not be considered as a replacement for traditional currencies. Le Maire said “it is out of the question” that Libra become a sovereign currency. “It can’t and it must not happen,” he stressed.
Le Maire called on the Group of Seven central bank governors, guardians of the global monetary system, to prepare a report on Facebook’s crypto project for their July meeting. He expressed his concern over Facebook’s priorities when it comes to making revenue or protecting consumer’s privacy. Furthermore, he talked about the implications of this “global” currency in terms of financing terrorism and money laundering.
Mark Carney, Governor of Bank of England, also talked about Libra at the European Central Bank’s annual symposium in Sintra, Portugal. “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation,” Carney said. He was of the view that regulators need to keep an open mind regarding technologies that can help with cheap and fast cross border payments. However, he said that they will “look at it very closely and in a coordinated fashion” at multilateral organizations including the G-7, the International Monetary Fund, Bank for International Settlements and Financial Stability Board.
Markus Ferber, a German member of the European Parliament, warned that Facebook could become a shadow bank, slipping out of the grasp of any regulators across the world. He said that regulators need to stay on high alert.
Facebook’s Cryptocurrency Could Change Global Economy
Facebook is building the Libra blockchain and stablecoin in collaboration with some big names from the industry such as Mastercard, PayPal, Visa, Stripe, and Uber. The idea of a virtual currency backed by such powerful organizations taking over the world’s finance is scary for regulators. A monopoly of such scale could cripple the world economy and create a further divide between the rich and the poor.
While Facebook’s Libra has the potential to become one of the most successful cryptocurrencies out there, regulators need to bring Facebook down from their God complex. Having a corporation like Facebook, who is infamous for disregarding consumers’ privacy rights for profits, take control over the world’s economy could have some horrifying implications for the people. This is why this reaction from European politicians is exactly what is needed right now.