French Finance Minister Bruno Le Maire while speaking at the OECD conference being held in Paris, France put forth the argument that Facebook’s (NASDAQ:FB 187.19 -0.15%) cryptocurrency Libra would be a threat to the sovereignty of nations around the world. “In these conditions, we cannot authorize the development of Libra on European soil,” Le Maire said. This comes as little surprise since France has been a leader in the European Union at regulating big tech firms and Le Maire has been a vocal opponent of Facebook’s Libra project since the June announcement. Most recently France issued a 3% digital tax against big tech companies operating in France after negotiations with the US brought the total amount down from an initial 9.5%. The cryptocurrency Libra is a joint effort between Facebook and a variety of other companies and was recently seeking approval from the Swiss financial regulator FINMA, as previously reported here.
This could slow the adoption across the European continent as regulators work to establish ground rules for the use of these types of currencies. Historically it was the purview of the nation-state to issue currency for the use of citizens. While this system is not perfect and is subject to abuse there are fears and concerns that a transnational private entity may be even more susceptible to currency manipulation, money laundering, and terrorist financing when commenting about Facebook’s latest effort. According to Reuters Le Maire “…said he had been in touch with both the incoming and outgoing heads of the European Central Bank about setting up a “public digital currency” under the aegis of the international financial institutions.”
This would effectively compete with the attempts of private companies like Facebook and other individuals in the cryptocurrency market by creating a government-issued and backed cryptocurrency. By using the trust of the public in the government the goal would be to push other currencies out of the market for the vast majority of the population. What it does not address is the concern of the most common users of cryptocurrencies which is the lack of trust they have in centralized banking.
Responding to the comments issued today by Le Maire was the Head of Policy and Communications for the Libra Association, Dante Disparte according to CNBC released the following statement:
“We welcome this scrutiny and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design. The Libra Association and its members are committed to working with regulatory authorities to achieve a safe, transparent, and consumer-focused implementation of the Libra project. We recognize that blockchain is an emerging technology and that policymakers must carefully consider how its applications fit into their financial system policies.”
We’ll need to wait and see if there is any further response on the part of Facebook.