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Facebook’s Libra sparks concerns among European financial institutions

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Following Facebook’s unveiling of its stable cryptocurrency, not only did top crypto influencers criticize the plan, but some European officials immediately called for deep scrutiny of the project, as reported by Bloomberg.

It must not become a “sovereign currency”

Facebook finally revealed its highly anticipated cryptocurrency, “Libra.” With Libra, the social network giant aims to bank the unbanked and power transactions between individuals across the globe. The token will be a sign of “freedom, justice, and money,” which, according to David Marcus, is exactly what Facebook is trying to achieve.

Despite its mission to provide financial services everywhere, the announcement raised concerns among European officials who believe consumers’ privacy will not be protected.

“This instrument for transactions will allow Facebook to collect millions and millions of data, which strengthens my conviction that there is a need to regulate the digital giants,” stated French Finance Minister Bruno Le Maire in an interview on Europe 1 radio.

The Frech Finance Minister is concerned that the new cryptocurrency will be used as a money laundering scheme to help finance terrorism. Le Maire said he asked the Group of Seven (G7) central banks to write a report on Facebook’s project by mid-July in anticipation of their meeting.

“It is out of the question [that Libra will] become a sovereign currency. It cannot and it must not happen,” added Le Maire.

Facebook’s 2 billion user base, which represents more people than the most populous country in the world—China, poses an existential threat to monetary institutions and governments across the globe. As Markus Ferber, a German parliamentarian put it, Facebook could become an unregulated “shadow bank,” reported Bloomberg.

Along the same lines, Mark Carney, the Bank of England Governor, expressed that “anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation.”

A combination of Facebook’s user base with its ability to leverage WhatsApp, Messenger, and Instagram could set the stage for Libra to become widely adopted in the short-term, but unlike Bitcoin, its success will depend on the regulatory demands that some of the world’s most powerful nations will impose on it.

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