An executive member of the board of the European Central Bank, ECB, Yves Mersch appears to be wary of the threat that Facebook’s Libra seems to pose, in as far as monetary policy and consumers of the cryptocurrencies in the European Union are concerned.
Reports from Reuters quote the executive board member saying in part, “Libra would diminish the ECB’s control over the euro, impair the monetary policy transmission mechanisms by affecting the liquidity potential of Euro regions banks and undermine the single currency’s international role.”
Libra is set out as a stablecoin that will be linked to a number of fiat currencies, government bonds and solely managed by the Libra Association. Its centralized existence, according to the executive board member, is also of grave concern. He moved to highlight that the coin will only be accountable to its shareholders, begging the question regarding trust issues as it will not be backed by any Central Bank.
Additionally, Mersch has said that the launch of Libra is facilitated by the same company that “had to explain themselves in front of congress 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.”
He moved on to rally European Union regulators to focus more on Libra in terms of bringing the digital coin under introspection and remit, saying that international cooperation would be necessary in order to battle the prospective or potential risks of the crypto project. He also shed a spotlight, giving a rallying call for Europeans not to forget the safe haven and “soundness of established payment solutions and channels in favor of the uncertainty and treacherous promises of Facebook’s Libra.”
Mersch is just one of the latest European Central Bank representatives discontent with the prospects of Libra. In July of 2019, another executive board member of the European Central Bank Benoit Coeure described Facebook’s Libra as a “useful and clarion call for regulators and public authorities.”
He is quoted to say, “it is out of the question to let them develop in a regulatory vacuum for their financial service activities because it is just too dangerous. We have to move more quickly than we have been able to do up until now. “
It should be noted that Facebook and the Libra association in conjunction with the development of the Libra project have come under the scrutiny of the European Union. It was recently reported that Facebook was under investigation by the European Commission as regards matters and concerns related to the Libra Project.