French Finance Minister Bruno Le Maire has criticized Facebook's digital currency Libra in a speech at a conference organized by the Organization for Economic Co-operation and Development (OECD) on cryptocurrencies in Paris. Libra endangered the sovereignty of the states. "I would like to say this very clearly: under these circumstances we can not allow the development of Libra on European soil." First, the transmitter had CNBC and the news agency AFP reports.
A means of payment in the hands of a private company, bearing systemic risks, warned Le Maire. It could "significant disruptions in the financial system" occur. Over the past few months, the digital currency has received much criticism from politicians. Le Maire had also criticized Libra on several occasions. Facebook announced that it would like to eliminate the criticism before the publication.
Federal Government is critical of Libra
The German government also sees Facebook's digital currency as critical. Since stable coins such as Facebook's Libra are tied to currencies and government bonds, the German government fears a great demand for government bonds by the editors of stablecoins. This could trigger market distortions. These could even curtail the effectiveness of monetary policy, quotes the Handelsblatt from an unpublished response by the Federal Government to a parliamentary inquiry.
'The ability of the central bank to influence short-term interest rates in the interbank market is dependent on its role as the sole provider of central bank money', the Handelsblatt quotes the federal government. "If this demand declined sharply by a shift to private stable credit, the ability of the central bank to control the short end of the yield curve could be compromised." In addition, the government fears one "Shifting lending from the banking system to the environment of stablecoins, changes in the securities and foreign exchange markets or in international capital flows".
Facebook officially announced plans for its digital currency Libra on June 18th. Previously, several information had already been leaked. Although Libra as Bitcoin and Ethereum based on the Blockchain, in contrast to these but a stable currency, a so-called Stablecoin. Libra is expected to hit the market in 2020.
At the beginning of January 2018, Facebook banished all advertising for cryptocurrencies from its site. The price of Bitcoin then collapsed by about ten percent. After the advertising ban Facebook was even advised because of various data scandals in the headlines. Only in March it was announced that the company saved the passwords of millions of Facebook users in plain text. For some users, Facebook requested the private password of the email account during the registration process.