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Facebook token runs into instant political opposition in Europe

Alastair Marsh, Bloomberg News on

Published in Business News

LONDON -- Facebook Inc.'s ambitious plan to roll out its own cryptocurrency ran into immediate political opposition in Europe, with calls for tighter regulation of the social-media giant.

French Finance Minister Bruno Le Maire said the digital currency known as Libra shouldn't be seen as a replacement for traditional currencies.

"It is out of question" that Libra "become a sovereign currency," Le Maire said in an interview on Europe 1 radio. "It can't and it must not happen."

Le Maire called on the Group of Seven central bank governors, guardians of the global monetary system, to prepare a report on Facebook's project for their July meeting. His concerns include privacy, money laundering and terrorism finance.

Libra was also a talking point at the European Central Bank's annual symposium in Sintra, Portugal, where Bank of England Governor Mark Carney referenced Libra. "Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation," he said.

Carney's 'Open Mind'

While Carney said "we need to have an open mind" about technology that can facilitate cross-border money transfers, "we 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. Meanwhile, Markus Ferber, a German member of the European Parliament, said Facebook, with more than 2 billion users, could become a "shadow bank" and that regulators should be on high alert.

Facebook is developing Libra, a stablecoin designed to avoid the volatility of Bitcoin and thus be useful for commerce, in partnership with some of the biggest names in payments and technology, such as Visa Inc. and Uber Technologies Inc. The new currency, which will launch as soon as next year, is pegged to a basket of government-backed currencies and securities.

 

While Bitcoin, the original cryptocurrency, has attracted a lot of attention since its creation a decade ago, it's still not widely used beyond market speculation. Facebook meanwhile, plans to build a new digital wallet that will exist in its Messenger and WhatsApp services to make it easy for people to send money to friends, family and businesses through the apps.

"This money will allow this company to assemble even more data, which only increases our determination to regulate the internet giants," Le Maire said in parliament.

(With assistance from Helene Fouquet and Lucy Meakin.)

(c)2019 Bloomberg News

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Distributed by Tribune Content Agency, LLC.

 

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