Yves Mersch, executive board member at the European Central Bank (ECB), has warned of the threat posed by Facebook’s Libra to monetary policy and consumers of the cryptocurrency in the EU.
Speaking on Monday, Reuters reports, Mersch said:
“[Libra] could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role.”
The centralized nature of Libra – which is planned as a stablecoin linked to a basket of fiat currencies and government bonds, and managed by the dedicated Libra Association – is also of “extreme” concern, according to Mersch. He highlighted that the coin would be accountable to shareholders, raising trust issues, and will not be backed by a central bank.
He further said Libra is being launched by the same company that “had to explain themselves in front of legislators in the United States and the European Union on the threats to our democracies resulting from their handling of personal data on their social media platform.”
Mersch called on EU regulators to bring Libra under their remit, adding that international cooperation is required to counter the perceived risks of the crypto project.
Finally, he called on Europeans not abandon the “safety and soundness of established payment solutions and channels in favor of the beguiling but treacherous promises of Facebook’s siren call.”
Mersch is the latest ECB representative to vent over the threat posed by Libra to conventional money systems. In early July, fellow executive board member Benoit Coeure said Facebook’s crypto is a “useful wake-up call for regulators and public authorities.”
“It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now,” Coeure stated at the time.
Also in the EU, Facebook has reportedly already come under investigation by the the European Commission over antitrust issues related to the Libra project.
ECB image via Shutterstock