Switzerland’s finance minister says Facebook’s Bitcoin-style currency needs a lot of reworking if it’s going to get off the ground.
Ueli Maurer said central banks are ‘not going to accept the basket of currencies’ to which Libra would be pegged, claiming it has ‘failed in its current form’. The cryptocurrency is due to launch next year but has faced months of severe criticism from authorities across the world.
Libra is meant to be managed by a Geneva-based independent association linking several companies and non-profit groups. But since early October, PayPal, Stripe, Visa and Mastercard and other payment services have withdrawn from the project amid growing pressure from regulators.
Officials in the US and elsewhere are concerned about the potential for illicit uses of the currency and Facebook’s battered reputation for privacy and data protection following the Cambridge Analytical scandal.
Governments and central banks, the only entitles legally permitted to issue currency, are also worried about how Libra will affect their sovereignty. Although cryptocurrencies like Bitcoin are legal in many places and are not dished out by states or banks, they are completely decentralised and are not dished out by any authorities.
But Facebook and the Libra Association – which would act similarly to a central bank – would have a great deal of control over the supply and usage of its currency.
In October, French Economy Minister Bruno Le Maire didn’t mince his words when he said Libra ‘is not welcome on European soil’. Speaking in Washington on the sidelines of the World Bank and International Monetary Fund autumn meeting, he added: ‘We will take steps with the Italians and Germans, because our sovereignty is at stake.’
Adtech and cryptocurrency professional Jon Walsh told Metro.co.uk: ‘Libra was never going to have an easy journey.
‘Shifting society to trust a corporate money over governmental money is fairly seismic, but Facebook have the network to pull it off, which may be very scary to governments and central banks.
‘I’m not sure what changes Libra would be able to make that would satisfy the majority of these institutions, so whether we will ever see a launch may well be in question.
Facebook may in the future consider building on Bitcoin and which has already proven itself to be hard to attack by governments.’
Earlier this month, a US Federal Reserve official Lael Brainard said ‘without requisite safeguards’ a stablecoin network like Libra ‘may put consumers at risk’.
Stablecoins are designed to provide stability by pinning them to relatively stable assets or currencies.
Libra is designed so people using WhatsApp, which is owned by Facebook, or the social media giant’s Messenger app, can send funds instantly to friends and family.
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