France has said it will block development of Facebook’s Libra cryptocurrency in Europe because it threatens the “monetary sovereignty” of governments.
“I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil,” the finance minister, Bruno Le Maire, said at an OECD conference on virtual currencies.
Facebook outlined its plans for Libra in June, in an announcement that was met with concern by governments and critics of the company. The social network’s reputation has been tarnished recently by its role in spreading fake information and extremist videos.
Libra is designed to be backed by a basket of currency assets to avoid the wild swings experienced by bitcoin and other cryptocurrencies. It is expected to launch in the first half of 2020.
Another key difference is that control over it would not be decentralised but entrusted to a Swiss-based non-profit association. Besides Facebook, backers of Libra include the payment companies Visa, MasterCard and PayPal, as well as the ride-hailing apps Lyft and Uber.
French officials have been outspoken in their warnings about the danger Libra poses. Le Maire said on Thursday: “The monetary sovereignty of countries is at stake from a possible privatisation of money … by a sole actor with more than 2 billion users on the planet,” he said.
Facebook has promoted Libra as an opportunity to provide low-cost online commerce and financial services to more than 1 billion “unbanked” people – adults without bank accounts or those who use services outside the banking system, such as payday loans.
Libra, and the Calibra digital wallet that would accompany it, promises eventually to give Facebook opportunities to build financial services into its offerings, expand its own commerce and allow more small businesses to buy ads on the social network.
But officials have raised concerns about how the currency would be regulated, particularly how it would comply with regulations about combating money laundering and financing of terrorism.