Tue, May 21, 2024

European Central Bank Signals Risk of Libra Digital Coins

Global stock markets

Recently, Yves Mersch, European Central Bank’s key legal official, indicated that Facebook’s Libra stablecoin is “beguiling but treacherous”. This was during a speech at the ECB’s legal meeting in Frankfurt on Monday.

News reports conveyed that Mersch’s remarks in an article published on September 2. It indicated that private currencies have little chance of establishing themselves as viable alternatives to centrally issued legal tenders.

Mersch believes that only independent central banks can fund sufficient institutional banking to make a currency steadfast and win public trust.

He further noted, “I sincerely hope that the people of Europe will not be tempted to leave behind the safety together with the soundness of established payment solutions. “

In addition, “As well as with the channels in favor of the beguiling but treacherous promises of Facebook’s siren call.”

Regulators all over the world have raised concerns over Libra’s potential money laundering and capital control implications. This was after visiting the Swiss financial regulators last month.

The European Commission is also planning to execute an early stage antitrust investigation into how Libra will be managed and how its payment system will work.

Facebook’s Petitioning Effort

Mersch indicated that central banks’ approach to currency would continue to evolve. Warnings also came up regarding the privately issued currencies such as Libra or other crypto assets.

He also said, “These cryptos can only fulfill some, but not all, of the functions of money”.

Meanwhile, United States lawmakers are still anxious over Facebook’s cryptocurrency project, Libra.

On the other hand, Bank of England governor Mark Carney has recommended a transformation of the global financial system. This is by replacing the United States dollar with a digital coin similar to Facebook’s Libra.

Elsewhere, Facebook is responding to the regulatory pressure by upraising its lobbying efforts.

More precisely, the social media giant recently appointed a Washington-based lobbying firm to help it deal with the negative response to its planned Libra cryptocurrency.

At the beginning of August, the social media giant also hired the previous assistant of United States Republican senator Mike Crapo, which is Susan Stoner Zook. It is for her to join the lobbying team for its Libra cryptocurrency project.

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