Facebook Libra Meets Roadblock in Germany and France

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Facebook’s Libra should be blocked in Europe, France says

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France says it will block development of Facebook’s Libra digital currency in Europe because it threatens the “monetary sovereignty” of governments.

Finance Minister Bruno Le Maire said Libra posed financial risks and could be open to abuse.

However, he did not spell out how France could keep Libra out of the 28-member European Union.

The social media giant announced plans for a currency in July, but the project has faced hostility and scepticism.

Talking about Libra at a meeting of the Organisation for Economic Co-operation and Development, in Paris, Mr Le Maire said: “This eventual privatisation of money contains risks of abuse of dominant position, risks to sovereignty and risks for consumers and for companies.”

Mr 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 international financial institutions.

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‘Serious concerns’

“Libra also represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption,” said Mr Le Maire.

“All these concerns about Libra are serious. I therefore want to say with plenty of clarity: in these conditions, we cannot authorise the development of Libra on European soil.”

Although Libra would not be decentralised, like other cryptocurrencies, control would be give to a Switzerland-based non-profit association.

But in another setback for Libra, this week Switzerland said the proposed payments system could face strict rules that typically apply to banks, on top of tough anti-money laundering laws.

The European Commission has responded to Mr Le Maire’s announcement, saying it would look at all aspects of Libra to understand issues ranging from tax concerns to worries over data privacy.

Asked about France’s stance, Vanessa Mock, a spokeswoman for the commission, said: “It’s likely that once we know more [about] the contours of the currency, the project will require some form of authorisation in Europe.”

“Then it would be up to the Libra association to contact relevant authorities – be they national or at EU level – to obtain the necessary licenses, if needed, before launching in the EU.”

Facebook’s Libra Association said Mr Le Maire’s comments highlighted the importance of its conversations with regulators around the world.

“We recognise that blockchain is an emerging technology, and that policymakers must carefully consider how its applications fit into their financial system policies,” Dante Disparte, head of policy at the association.

Libra, which has the backing of payments firms Visa and Mastercard and taxi apps Lyft and Uber, is expected to launch next year.

The Group of Seven advanced economies warned in July that it would not let Libra proceed until all regulatory concerns had been addressed, saying that a prolonged discussion over the project might first be required.

The US Congress is looking into Libra’s potential impact, while central bank chiefs, including the UK’s Mark Carney, have voiced scepticism. US President Donald Trump has tweeted he is “not a fan” of the currency.

Facebook’s Libra Hits Extra Regulatory Roadblocks in Europe

BRUSSELS — The European Union will introduce legislation aimed at preventing libra, Facebook Inc.’s proposed digital currency, from undermining Europe’s single currency and being used as a money-laundering tool — representing one of the toughest regulatory responses so far.

Valdis Dombrovskis, who is slated to stay on as vice president of the European Commission in charge of financial regulation, said Tuesday that libra posed a systemic risk to the euro, given the size of the companies that are behind the global cryptocurrency-based payments network.

“Yes, we will need to regulate libra, to supervise it on an EU level, both from the perspective of financial stability and the protection of financial investors,” he told EU lawmakers.

“Financial stability, monetary stability, anti-money-laundering — these are just a few aspects that need to be considered,” Mr. Dombrovskis later added.

His comments deal a further blow to the social-media giant’s ambitions to transform financial services. Lawmakers and regulators in the U.S. and Europe were quick to criticize libra after it was unveiled in June, citing concerns about how Facebook and the companies involved would protect users’ privacy and stop criminals and terrorists from using it to launder money.

In September, France and Germany called for libra to be blocked, issuing a joint statement saying that “no private entity can claim monetary power, which is inherent to the sovereignty of nations.”

Separately, the European Commission, which acts as the EU’s main antitrust enforcer, has launched a preliminary inquiry into concerns that libra could drive out competitors. Questions on both the financial stability and the competitive aspect of the planned currency have been sent to Facebook and the Libra Association of companies backing the project. Mr. Dombrovskis said he hasn’t yet heard back.

Dante Disparte, head of policy and communications for the Libra Association, told The Wall Street Journal that the organization recognized that as libra is an emerging technology, “policy makers must carefully consider how its applications fit into their financial system policies.”

“The Libra Association and its members are committed to working with applicable regulatory authorities to achieve a safe, transparent, and consumer-friendly implementation of the Libra project,” he said.

A Facebook spokesman said the company “will comply with applicable financial laws and regulations, including anti-money-laundering obligations”. He played down competition concerns, saying that Libra “will be an open platform,” and that the company welcomes competitors developing their own payment systems.

Libra forms a major part of Facebook Chief Executive Mark Zuckerberg’s strategy of moving the company away from its reliance on targeted advertising on public platforms.

However, amid the governmental backlash, companies that had agreed to back libra are reconsidering their involvement. PayPal Holdings Inc. is withdrawing from the coalition Facebook assembled to launch the currency and The Wall Street Journal reported in October that Visa Inc., Mastercard Inc., and other financial partners were reconsidering their participation.

However, other companies remain committed, and on Tuesday, British telecommunications company Vodafone Group PLC said it would sign up.

Mr. Dombrovskis’ plans for new regulation needs to be fleshed out in coming months, and EU member countries, including France and Germany, will have a considerable say. This would be the EU’s first regulatory step regarding digital currencies, although the commission previously has warned about the risks to investors from bitcoin’s high price volatility.

In parallel, some central banks in Europe are exploring their own version of digital currencies. Switzerland’s central bank announced Tuesday it was partnering with the Swiss stock exchange to explore the tokenization of the Swiss franc, making digital central bank money available for trading.

France and Germany agree to block Facebook’s Libra

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PARIS (Reuters) – France and Germany have agreed to block Facebook’s Libra cryptocurrency, the French finance ministry said on Friday.

In a joint statement, the two governments affirmed that “no private entity can claim monetary power, which is inherent to the sovereignty of nations”.

French Finance Minister Bruno Le Maire said on Thursday that Facebook’s new cryptocurrency should not be allowed to operate in Europe while concerns persist about sovereignty and persistent financial risks.

(Reporting by Laurence Frost; editing by Richard Lough)

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