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Swiss minister says Facebook’s Libra has ‘failed’ in current form
SAN FRANCISCO, Dec 28, 2019 (BSS/AFP) – The Swiss president and finance
minister has delivered the latest blow to Facebook’s planned Libra
cryptocurrency, saying it has “failed in its current form,” Swiss network SRF
reported Friday.
“The central banks are not going to accept the basket of currencies” that
Libra is supposed to be based on, Ueli Maurer, who is in his final days in
the rotating presidency of the Swiss Confederation, Switzerland’s federal
council, told SRF.
Libra, a high-profile project of social network giant Facebook, is
tentatively scheduled for a 2020 launch but has faced months of severe
criticism from some of the world’s most influential financial authorities.
In theory, Libra will be managed by a Geneva-based independent association
linking several companies and non-profit groups.
But since early October, the online payment companies PayPal and Stripe,
as well as Visa, Mastercard and others, have withdrawn from the project amid
growing pressure from American and other regulators.
They have cited the potential for illicit uses of the currency and have
underscored the battered reputation of California-based Facebook in matters
of privacy and data protection.
– Loss of ‘sovereignty’ –
Countries and central banks — for now the only entities legally permitted
to issue currency — have also expressed concern about a blow to their
sovereignty.
In October, French Economy Minister Bruno Le Maire bluntly expressed his
concerns, saying, “Libra is not welcome on European soil.”
“We will take steps with the Italians and Germans, because our sovereignty
is at stake,” he said, speaking in Washington on the sidelines of the fall
meeting of the World Bank and International Monetary Fund.
Earlier this month, a US Federal Reserve official expressed American
reservations.
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“Without requisite safeguards, stablecoin networks at global scale may put
consumers at risk,” Fed Governor Lael Brainard said in a speech in Frankfurt.
Cryptocurrencies to date have suffered from “staggering” losses due to
fraud and theft, Brainard said.
– ‘Serious concerns’ –
Stablecoins are a type of cryptocurrency designed to provide stability —
avoiding the wild swings of bitcoin and other cryptocurrencies — by being
pegged to relatively stable assets or currencies.
Libra is designed to make it easy for users of WhatsApp, a Facebook-owned
messaging platform, to instantly send funds to friends or family.
The size of Facebook — 2.2 billion people worldwide connect on at least
one of its platforms, which also include Instagram, WhatsApp and Messenger —
would give it the potential to disrupt the global financial system, making it
far harder for central banks to manage, Fed chairman Jerome Powell told US
lawmakers in July. He expressed “serious concerns.”
The Libra association declined to comment when contacted by AFP.
But in October, Facebook CEO Mark Zuckerberg testified before a
congressional committee that Libra would not be launched until it received
all necessary authorizations from the authorities.
In response to regulators’ resistance, Zuckerberg last month opened the
door to scaling back plans for Libra if it cannot win the needed approvals.
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