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France vows it won’t let Facebook’s new digital currency in Europe

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PARIS: The French Finance Minister, Bruno Le Maire has said on Thursday that the social media giant Facebook’s new digital currency ‘Libra’ is too risky to be authorized for development in Europe.

While speaking at Organisation for Economic Co-operation and Development (OECD) conference in Paris, he explained, “All these concerns about Libra are serious. I therefore want to say with plenty of clarity: In these conditions we cannot authorize the development of Libra on European soil,”

He cited systemic risks which the new digital coin may pose for the European market. These include financial risks, risks for the sovereignty of other nations’ currencies and the potential for abuse of market dominance.

Le Maire is widely known to be critical of ‘Libra’. In June, earlier this year, he had warned that once the new digital currency gains widespread circulation, the most dangerous repercussions lie in its potential use for money laundering and terror financing.

The minister also said he had spoken with European Central Bank President Mario Draghi and Christine Lagarde, the ECB’s next chief, about creating a “public digital currency” apparently to counter the Libra and the likes of it.

The major issue with Libra is the fact that while normal fiat currencies are backed by a country’s central bank, Libra is to be regulated by an independent non-profit organization based in Switzerland dubbed the Libra Association. The Libra Association will apply for a payments license in Switzerland, which proves beyond doubt that country has been chosen to host Libra’s main supervisory authority.

The Libra Association will comprise Facebook as well as 27 other companies like PayPal, Visa and MasterCard.

The main goal of the Libra project is to enable fast and low-cost payments and money transfers for people around the world. Facebook also previously noted the Libra is to be backed up by traditional currencies held in bank accounts, which is expected to enhance confidence in the new digital coin.

France is not the only country to have raised concerns regarding ‘Libra’, UK, US and even Russia have expressed doubts that it might create risks for the global financial system owing to uncontrolled financial flows once it is launched. Similarly China has completed work on introducing its own digital currency and is expected to be launched in October this year just before Facebook’s plan to come out with Libra in early 2020.

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