France’s finance minister, Bruno Le Maire has said that the development of Facebook’s new Libra cryptocurrency will be blocked in Europe unless concerns over risks to consumers and to the monetary systems of countries can be addressed.
Libra – Announced in June
Announced in June this year and due to be launched in 2020, Libra is Facebook’s cryptocurrency which will enable payments to be made by a special phone app and by messaging services such as WhatsApp so that spending the new currency could be as easy and fast as texting. Management of the currency, units of which can be purchased via Libra’s platforms and stored it in a digital wallet called “Calibra”.
In addition to Facebook, the Association has 27 other members/partners, all of whom will most likely have to accept Libra, including Mastercard, PayPal, eBay, Spotify, Uber, Vodafone, and a variety of charities such as Women’s World Banking.
For Use By The ‘Unbanked’
Facebook has promoted Libra as being targeted mainly at the 1.7 billion adults worldwide who do not have a bank account, and who use services such as payday loans although 1 million plus of these already have a smartphone, thereby enabling them to use the apps through which Libra can be operated. This “unbanked” segment of the potential market contains mainly people from developing countries, a large proportion of which are women.
Why Does France Object?
In Bruno Le Maire’s speech at the OECD Global Blockchain Policy Forum 2019 he identified several reasons why France would consider blocking Libra in Europe, the main one being that monetary sovereignty of countries may be at stake from a possible privatisation of money e.g. because Facebook is a sole actor (company) with more than 2 billion users on the planet. Mr Le Maire also expressed concern that Libra’s digital credits could facilitate money laundering and terrorism.
Other concerns about Libra’s introduction include:
- Possible risks to consumers (their personal data) in the light of Facebook’s sharing of user data with Cambridge Analytica.
- Consumers may turn to cryptocurrencies like Libra during a time of national crisis, which could make it more difficult for governments to stabilise their economies, thereby making matters worse.
- The need for Libra to meet regulations for consumer protection, money laundering and financing terrorism.
- Libra uses blockchain, which many banks still consider to be an emerging technology that should be approached with caution.
Highlights The Need To Work Together
According to the head of policy and communications at the Libra Association, the concerns expressed by Bruno Le Maire highlight the need for the project’s backers to work together with regulators to make the implementation of the Libra project safe, transparent and consumer focused.
What Does This Mean For Your Business?
For Facebook, Libra is an opportunity to monetise another of its services, and an opportunity to diversify. Even though Facebook has promoted Libra as a currency for use by the 1.7 billion people without bank accounts, it is more likely that Libra will gain more users with bank accounts in developed countries more quickly. Also, some more sceptical commentators have noted that Libra may be less about money and blockchain but more about gathering more information about the identity of clients.
Even though Libra users are not intended to be businesses, if Libra does help the ‘unbanked’ this could have a knock-on effect in helping that segment of society to buy more goods and services, thereby helping businesses and the economy.
Libra looks set to face more scrutiny and attempts to make sure that it meets the regulation of countries that are worried by the possible shift in control from governments and central banks to big business that Libra could bring. This shift in control could have a number of effects on the business environment and the economies of countries if Libra proves to be popular.