By
Steve Muchoki
April 19th, 2024
France warned that it will block the development of Facebook’s planned Libra cryptocurrency in Europe as it represents itself a threat for the “monetary sovereignty” of governments.
It seems that France decided to go rigorous on Facebook’s Libra by entirely blocking the development of it. When Facebook announced their Libra project in June this year, they called it a “global currency and financial infrastructure powered by a version of blockchain – the technology that underpins Bitcoin”.
However, a lot of governments were really against even the idea and France was the harshest of them all. French Finance Minister Bruno Le Maire then called out on Libra saying it shouldn’t be seen as a replacement for traditional currencies. He then said:
“It is out of question that Libra become a sovereign currency. It can’t and it must not happen.”
He then called on the Group of Seven central bank governors, that are acting as protectors of the global monetary system, regarding their preparations on Facebook’s project. His concerns included “privacy, money laundering, and terrorism finance.” He also added:
“This money will allow this company to assemble even more data, which only increases our determination to regulate the internet giants.”
Libra cryptocurrency is a stable currency designed by Facebook on a reliable and secure open-source blockchain, supported by a reserve of actual assets, and managed by an independent association. The Libra’s mission is a simple financial infrastructure and global currency that influences billions of individuals. As a result, it intends to achieve the promise of “the internet of money.”
However, the project has faced counterblast from regulators and governments across the globe over concerns that the currency could be used for money laundering and financial terrorism. We wrote also about the Libra Association, the group of companies that have invested a minimum of $10m into the scheme, applying for a payment license from Switzerland’s financial watchdog.
The European Central Bank called Libra “too dangerous” and said that Libra could sabotage its capacity to set monetary policy, and Financial Conduct Authority (FCA) chief executive Andrew Bailey said Facebook “will not walk through” authorization for the currency.
European Opposition
But, it’s not just France. Libra is constantly being a hot subject to talk about at the European Central Bank’s annual symposium in Sintra, Portugal, where Bank of England Governor Mark Carney referenced Libra. He said:
“Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation.”
While Carney noted that open mind is necessary, he added that he plans to 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.
In the meantime, 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.
The truth is, Facebook definitely has huge plans for Libra, even though they still haven’t revealed it. A new subsidiary, dubbed Calibra, will run a wallet that will be necessary for the initial start.
According to their white paper Calibra is a regulated subsidiary created by Facebook in order to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network. Some analysts think those services will likely include games and commerce.