ECB urges Europe to ignore 'treacherous promises' of Facebook's Libra cryptocurrency

ECB urges Europe to ignore 'treacherous promises' of Facebook's Libra cryptocurrency

Ever since social media giant Facebook announced that it would launch its own crypto project, a host of national and worldwide authorities have voiced their concerns.

Yves Mersch, who is a former Governor of Luxembourg Central Bank, believed that the proposed virtual asset's launch could weaken European Bank's ability to introduce monetary policies and stated that the rest of Europe should avoid its "treacherous promises".

Mersch is the latest European Central Bank representative to vent over the threat posed by Libra to conventional money systems.

The speech was aimed squarely at the cryptocurrency project of Facebook and its Libra Association partners, but Mersch also took a sideswipe at cryptoassets in general, making very unfavorable comparisons between cryptos and currencies issued and backed by central banks. Also, the rest of the Balance of the Association as well as the reputation of Facebook. He criticized the distribution model of the Libra currency, with Facebook having the sole and unchallenged authority to decide which companies get the currency for redistribution. All this while the company describes Libra as a global currency.

He added, "With such a set-up, it is hard to discern the foundational promises of decentralization and disintermediation normally associated with cryptocurrencies and other digital currencies". The House Financial Services Committee, Federal Reserve chairman Jerome Powell said that the current Libra framework has not absolutely addressed wider concerns around issues such as "Money laundering, data protection, and consumer privacy".

Mersch, that's what fiat currencies are centralized, and but, in contrast to Libra, they have a sovereign entity, a central uitgifteautoriteit.

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This is an "extremely concerning" structure, since shareholders are not seen as repositories of public trust, he said.

Mersch stressed a central bank's dual role both in providing the institutional backing necessary to issue reliable forms of money and in rigorously preserving public trust in them.

"So the notion of stateless money is an aberration with no solid foundation in human experience", he added.

Mersch is the latest to attack Libra, with US lawmakers having criticized the currency repeatedly over the past few months.

The main regulatory challenge, once the problem of Libra's classification as either a security, a cryptocurrency or other financial instrument is solved, is whether - as a means of cross-border currency transmission - it can be effectively overseen by the world's domestic regulators.

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