ECB Urges Europeans to Ignore Facebook’s ‘Libra’ Cryptocurrency
Last updated September 2, 2019
- An ECB board member calls Libra’s promises treacherous and calls Europeans not to adopt it.
- The spokesperson highlighted the risks for the traditional monetary system and why the launch of Libra threatens it.
- Similar voices have been heard in the United States, as Libra is expected to hit banks there even harder.
Yves Mersch, a board member of the ECB (European Central Bank), has made a bold statement against Facebook’s upcoming cryptocurrency “Libra”. During a speech at a legal conference in Frankfurt, he has characterized Libra’s promises as “beguiling but treacherous”, and suggested that this new payment system would cause damaging disruption to the traditional banking network. Moreover, he predicted that this development would undermine the ability of the ECB to set a stable monetary policy. As he also stated, he hopes that Europeans will turn their backs to Libra, choosing the safety and soundness of established payment solutions.
The impairment of the banking system in Europe will depend directly on the level of acceptance of Libra. If many millions adopt it and start carrying out the majority of their financial transactions through it, the classic monetary system will be literally pushed aside. Additionally, the banks will see their liquidity getting to dangerously low levels, and the international role of the “Euro” will be significantly weakened. As Mr. Mersch detailed, all of this will have a real impact on European countries, as the banking system is the backbone of the economic activity and prosperity on the continent.
Regulators in the US expressed similar concerns last month, with the Finance Committee declaring their opposition to Libra. Their reasoning involved the increasing influence of Facebook on people’s lives, and how the social media giant would now be able to track their users’ transactions and buying trends. The Libra Foundation fended off these claims by saying that the user IDs in their system will be entirely different and unconnected from the one that is used on the social media platform. This response was also met with aggressive comments, with some politicians worrying about “too much privacy” that could lead to money laundering and crime funding.
Facebook’s Libra will be the first blockchain project that will have a stable value, bank-level verification, and anti-fraud systems, involving big names in the partnership like MasterCard, eBay, PayPal, Vodafone, Uber, VISA, Spotify, and more. It is natural for such a new system to bring shivers to the monetary status quo, as it’s nothing like what traditional bankers were used to dealing with so far. If all goes according to the plan, Libra will get launched in 2020, enabling its users to carry out transactions through Messenger, WhatsApp, and a standalone version of the “Calibra” wallet.
Are you planning to use Libra when it becomes available, or will you continue using your bank for all transactions? Let us know where you stand in the comments down below, and also on our socials, on Facebook and Twitter.
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