France’s finance minister said on Thursday that Facebook’s Libra cryptocurrency cannot be allowed to operate in Europe whilst there are ongoing concerns about sovereignty, systemic financial risks as well as there being the risk of abuses by a dominant market player.
Facebook, which is the world’s largest social media network, announced back in June that it has plans to launch the new currency, with it planning to delve into the world of e-commerce.
However, Libra has been heavily criticised ever since it was announced, with plenty of regulators from all over the world saying that there are fears that it would destabilise the global financial system altogether.
Bruno Le Maire, France’s finance minister, did not initially say how France can keep Libra completely out of the European Union.
Mr Le Maire also stated that he contacted both Mr Draghi and Ms Lagarde, the outgoing and incoming heads of the European Central Bank respectively, in order to talk about potentially setting up a “public digital currency” that is protected by international financial institutions.
Whilst at a meeting of the Organisation for Economic Cooperation and Development in Paris, Le Maire chose to speak about the Libra project, saying that “This eventual privatisation of money contains risks of abuse of dominant position, risks to sovereignty, and risks for consumers and for companies.”
Le Maire also added that “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.”
Upon hearing these comments, Dante Disparte, head of policy and communications for the Libra Association, said that such comments “further underscore the importance of our ongoing work with regulatory bodies and leadership around the world.”
Mr Disparte welcomed the scrutiny, saying that currently the main priority for the Libra Association was to work with regulatory authorities to reach an agreement.
Libra has face numerous criticisms ever since it was announced, with the Group of Seven advanced economies saying in July that Libra would not be allowed to proceed with its measures until all regulatory concerns are addressed.
Libra also faced another setback earlier on this week, with the association being based in Geneva, Switzerland, which is not a member of the European Union, as the Swiss government stated that the proposed payments system could face strict rules that typically apply to banks, as well as there being tough anti-money laundering laws.
The Libra Association responded by said that it planned to apply to become a licensed payments system in Switzerland.