Facebook unveiled its much-awaited cryptocurrency Libra, along with its governing body, Libra Foundation. Though there was great excitement among crypto enthusiasts, tech geeks, politicians, and regulators around the western world. While some have called for strict regulations, others have called for a stay on Libra.
French Finance Minister Bruno Le Maire has come out with fierce criticism on Libra, stating that the digital currency should not be viewed as a substitute for fiat currencies. He said,
It is out of the question that Libra becomes a sovereign currency. It can’t, and it must not happen.
Le Maire has called for a meeting of the G7 Central Bank Governors, who are often considered as the guardians of the global monetary system. The Group of Seven includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. Le Maire also said that money which would be accumulated by Facebook via Libra poses serious threats. He said,
This money will allow this company to assemble even more data, which only increases our determination to regulate internet giants.
The G7 will expectedly meet in July and will prepare a joint report on Libra prior to the meeting for discussion. The group will discuss the possible implications of Facebook’s cryptocurrency in anti-social activities like terror funding, money laundering, and privacy risk.
Libra is a stablecoin backed by traditional assets like bank deposits and government bonds. It will be publicly launched in the first half of 2020. The token was a topic of discussion also at the European Central Bank’s annual conference in Sintra, Portugal. Referring to Libra, Mark Carney, Bank of England Governor said,
Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation.
Carney further added that though the authorities need to have open mind technology facilitating cross-border money transfers, it is important at multi-nation regulatory organizations like the G7, IMF, Bank for International Settlement, and Financial Stability Board, must monitor them closely and in a coordinated manner. Markus Ferber, a German Member of European Parliament, stated that regulators around the world should be at high alert as with its 2 billion-strong user base, Facebook could become the biggest shadow bank.
Across the Atlantic Ocean, lawmakers in the United States have taken a much stricter stand against Libra. Chairperson of the US House of Representatives’ Financial Services Commission, Rep. Maxine Waters, has requested Facebook to halt the development of the stablecoin. In an official statement, she said,
Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.
The hostility from lawmakers and regulators was expected even before the launch. However, it is quite disappointing that the regulators have fired their guns after Libra was launched, despite the fact that the world knew for more than a few months that Facebook was developing payments focused cryptocurrency. It would have been much better and efficient if these objections and all the discussions had happened before the launch.