Backlash Against Facebook’s Libra As European Government Officials Call For Action
It seems that not everybody is excited to find out that Facebook is launching their own cryptocurrency and it is probably not so surprising considering their previous data scandals. The French Finance Minister has called upon all the central banks in Europe to look into the social media giant’s new cryptocurrency called Libra. Since their problems in 2018 with Cambridge Analytica, government officials, as well as the public, have been very cautious when it comes to data owned by Facebook.
Facebook had announced its official cryptocurrency today which has been dubbed as Libra. It is designed to be a stable coin that will run on the blockchain secured by over 100 distributed computer servers worldwide, which will allow users to send money to each other for little to zero fees.
The whitepaper for the project states,
“Libra is a simple global currency and financial infrastructure that empowers billions of people”
The blockchain is expected to go live at some point in 2020 and the entire operation will be managed by the Libra Association – a non-profit based in Switzerland.
The Libra Association will have 28 founding members which include corporations from the payments, technology, telecommunications, and venture capitalist industries. Some of the founding members include huge name corporations such as Visa, Mastercard, PayPal, Uber, Lyft and Coinbase. Very recently, Spotify has come forward to announce they will be joining the Libra Association also.
Calibra, the development company behind Libra, will develop financial services and projects around the Libra network, with their own wallet being the first app they develop.
The French Finance Minister, Bruno Le Maire, has recently publicly aired his concerns regarding Libra on a recent European Radio 1 interview. Le Maire stressed that Libra should not be seen as a replacement for regular currencies;
“It can’t and it must not happen.”
The French Finance Minister continued to call upon the Group of Seven Central Banking Governors to prepare a report for their upcoming July meeting where the Facebook cryptocurrency can be discussed.
This sentiment is further shared by Markus Ferber, a German member of the European Parliament, as he stated that Facebook could become a “shadow bank” and warned all regulators to stay on high alert.
“Multinational corporations such as Facebook must not be allowed to operate in a regulatory nirvana when introducing virtual currencies,”
Taking a look at the previous track record of Facebook, it is perhaps understandable why the European Government officials are voicing their concern about the new project from Facebook. If Facebook is successful in rolling out Libra, they might have the power to become a “shadow bank” as expressed by Ferber.
However, it is also important to note that Facebook will not have full governance over their blockchain and instead will only have the power of 1 vote in governance decisions – the same as the rest of the founding members for the Libra project.
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