Different governments around the world were unsettled after American social media giant Facebook announced a permissioned Blockchain digital currency, named Libra.
This proposed digital currency that is reportedly backed by a number of major national currencies, did not excite financial regulators in America, Asia, and Europe. Here are 4 countries that are really not feeling the power move by Facebook.
The European powerhouse has probably been the most openly vocal about Libra, expressing its reservations by stating that it will block the development of the Libra. While expressing concerns about consumer risk and government’s monetary sovereignty, French finance minister Bruno Le Maire stated in a Parisian conference on virtual currencies:
“Libra also represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption. I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil. The monetary sovereignty of countries is at stake from a possible privatization of money by a sole actor with more than 2 billion users on the planet.”
The minister himself has been a vocal critic of Facebook’s Libra, protesting that the social media giant had failed to protect user data over the years and so shouldn’t be allowed to have its own cryptocurrency.
Germany is in strong agreement with France, with the country’s Finance minister, Olaf Scholz, stating that German policy makers are strongly against the idea of a parallel currency.
“We cannot accept a parallel currency. You have to reject that clearly.”
Germany also backed up French sentiment that Libra presents risks to the financial sector and must not be allowed in Europe. The two countries released a joint statement stating that;
“No private entity can claim monetary power, which is inherent to the sovereignty of nations.”
The United States
The U.S took a highly skeptical stance at one of its own home companies trying to subvert the dollar with an alternative digital currency. The U.S congress immediately ordered Facebook to stop the development of Libra after it was announced. A letter from the democratic head of the house committee on financial services, Maxine Waters read;
“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action. Failure to cease implementation before we can do so risks a new Swiss-based financial system that is too big to fail.”
China is not a big fan of Libra but not because it sees the Libra as a threat to the Yuan. It sees Libra as a threat to the central bank digital currency (CBDC) that the people’s bank of China (PBoC) is developing. Just like other central banks around the world, the PBoC is not looking to allow a private currency undermine its financial authority in the country.
China is also worried that the U.S dollar may play a large role in backing the Libra. According to the PBoC’s director Wang Xin,
“If the digital currency is closely associated with the US dollar, it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies. But there would be in essence one boss that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”
The common theme here is that countries do not trust Facebook’s ability to protect user’s privacy and they are also not willing to allow a private entity subvert the local financial systems in place in their countries.