FranceBlock: France deals new blow to Facebook’s Libra cryptocurrency by blocking development plans
September 27, 2019
2 min read
What's going on here?
The French finance minister, Bruno Le Maire, said France will block the development of Facebook’s Libra cryptocurrency in Europe until the concerns over the risk to consumers and the government’s monetary sovereignty were addressed.
What does this mean?
The authorisation of Libra in Europe will be put on hold until these concerns are addressed. When Facebook unveiled Libra in June (see our article on that here), many were concerned that it could shift control over the economy from the central banks of governments to private companies. Le Maire said “it would be a global currency held by a single player, which has more than two billion users around the world. The monetary sovereignty of states is under states is under threat”.
Libra’s launch also raised concerns about the risks such a currency could pose to consumers. Le Maire expressed those concerns, commenting that Libra may “substitute itself as a national currency” and this could potentially cause financial disruption. This concern is especially warranted given the Cambridge Analytical Scandal. This drew attention to Facebook’s management structure, which was heavily criticised, and the overzealous manner in which Facebook shared its consumers’ data.
What's the big picture effect?
As the world of cryptocurrency expands, policymakers have to carefully consider how this new currency will fit into the traditional financial policies and banking methods that have historically reigned supreme. France has highlighted these concerns in its decision to block Libra, ensuring they won’t support Libra until it satisfies certain compatibility criteria.
Facebook promoted Libra as an opportunity to provide low-cost online commerce and financial services to more than a billion “unbanked” people. However, many have questioned whether the currency serves an ulterior purpose. Damian Collins, chair of the Digital, Culture, Media and Sport Committee, told the Financial Times that “Libra suggests that Facebook [is] almost trying to turn itself into its own country… A global organisation that doesn’t have physical boundaries but basically a global community who are solely under the oversight of Mark Zuckerberg”. This again is not unwarranted, especially given the power and global reach of Facebook; it currently reaches more people than the population of China. Therefore, the concerns over Libra are largely justified and this scrutiny could set a precedent for other global companies who want to dabble in cryptocurrency .
Having said this, Libra has welcomed the concerns and highlighted the fact that it wants to ensure a safe project. Indeed, Dante Disparte, the head of policy and communication at the Libra Association (the non-profit organisation developing the currency), said the association wanted to work with regulators to achieve a “safe, transparent and consumer-focused implementation of the Libra project”. This either shows that Libra is serious about creating a new currency and hopes to safeguard consumers so the currency thrives, or it could be a strategic ploy to assuage the fears of regulators and foster public confidence.
Overall, Libra now faces a lot of scrutiny and, although the launch will not be smooth sailing and is likely to trigger many more concerns, it is going to be an interesting and novel journey for Libra.
Report written by Maab Saifeldin
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