France has announced that it will be blocking the launch of Facebook’s upcoming Cryptocurrency ‘Libra’ in Europe. France’s finance minister, Bruno Le Maire, made the announcement during an OECD conference. He claims that Libra could threaten the monetary sovereignty of governments.
“I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil.”
Le Maire pointed out the main problem with Libra as being the possible privatization of money.
“The monetary sovereignty of countries is at stake from a possible privatisation of money … by a sole actor with more than 2 billion users on the planet.”
Authorities have also been concerned about Libra potentially replacing local currencies during periods of crisis. This would be the same as people in countries with hyperinflation (Zimbabwe, for example) replacing the local currency with US dollars. If people had the alternative to replace national currencies with Libra, this could hinder the government’s efforts to manage the economy.
Facebook’s Vision of Libra
In its website libra.org, the following has been included as the mission statement for Libra:
“A simple global currency and financial infrastructure that empowers billions of people.”
Libra claims that its primary target audience are the 1.7 billion people on earth who don’t have access to traditional banking and digital currencies. Facebook claims that Libra will make transferring money internationally much safer and cheaper. Facebook already has a massive user base of 2 billion people.
While Facebook’s vision may seem benevolent, Le Maire isn’t alone in his fears. Back in June, the chair of the Financial Stability Board (FSB) (the G20 countries’ policy coordinator), Randal Quarles, pointed out his own concern about Libra.
“A wider use of new types of crypto-assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation. The FSB and standard setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”
Independent Governing Body
Facebook claims that it will not be involved in the management and regulation of Libra. Instead there will be an independent governing body that will initially consist of 28 members and will function as a non profit organization. These members include the likes of eBay, PayPal, Mastercard, Uber etc. and each of them had to invest $10 million to join the governing organization.
An attorney specializing in blockchain, Marc Boiron, summarized this governing organization as the following:
“The network initially will be managed by the Libra Association, a nonprofit based in Switzerland, which currently has 28 members but will have up to 100 members at the launch of the network.”
From the start, privacy has been a major concern with Libra. Facebook has been under fire in the past few years for privacy related issues such as mishandling of user data. Company CEO Mark Zuckerberg even appeared before congress to testify on behalf of his company.
With regards to Libra, Facebook assures concerned parties that all transactions and user activities in Libra’s blockchain will be ‘pseudonymous’.