Facebook announced its intention to come out with its cryptocurrency (Facebook Libra) in the first half of 2020. This announcement grabbed the headlines of major news outlets and caused some excitement in the industry as this initiative signifies how well cryptocurrency is being adopted and appreciated by major institutions. However, the development has faced a lot of criticisms and challenges with the latest objection coming from France.
Image Source: www.moneycontrol.com
Bruno Le Maire, at the OECD conference on virtual currencies, announced that the Libra development would not be authorized on the European soil. According to him, the introduction of Libra into the financial world is a threat to the monetary sovereignty of governments.
“I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil,” he said. Cryptocurrency taking over the digital financial world has been a great expectation. However, concerns have been raised concerning its volatility jeopardizing its role as a stable asset.
Facebook Libra will be backed by a basket of currencies to stabilize its price. As part of the development being put in place, the Libra will not be a decentralized currency like Bitcoin and Ethereum.
Le Maire expressed that the monetary sovereignty of various countries across Europe is at stake due to the possible privatization of money controlled by a sole individual who has about 2 billion users at his disposals.
Facebook has been accused of abusing data collected from billions of users in the past. Libra has been said to be a currency for the developing countries with favourable features that may hit an unexpected high adoption rate. According to critics, this currency will make people abandon their national currencies in time of crisis.
Image Source: www.futurumresearch.com
Regardless of the many negative remarks on the introduction of this cryptocurrency, a number of experts support the development. The Libra will provide low-cost online commerce and financial services, and also become available to the unbanked. U.S. Treasury Secretary Steven Mnuchin earlier sated that Facebook needs to set a high standard before they proceed with the launching of their digital asset.
According to him, cryptocurrencies have in the past been used for money laundering and other criminal activities. He admitted that Libra will go a long way to help offset the many gaps in the traditional banks. However, he believes Facebook has a lot of work to do to convince them before it gets their acceptance.
Facebook has made a lot of effort to make this project a success. As part of their plans to establish Libra as a global coin, Facebook recently applied to the Swiss authorities to recognize Libra as a payment system in Switzerland. According to the FINMA, all payment systems in the country are strictly subjected to the anti-money laundering act. In this case, all services that pose a risk of money laundering would be underlined and reviewed.
FINMA explained that Facebook will need international coordination from regulators, and also prioritize and address the requirement for managing the reserve and its governance aside the anti-money laundering policies. The Facebook Libra is expected to kick the ground running with all shortcomings addressed before its official announcement.
Source: The Guardian
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