France and Germany reaffirm blocking Facebook’s Libra cryptocurrency

Update Oct 14: After Paypal, Visa, Mastercard, eBay, Stripe, and Mercado Pago have also withdrawn from Facebook’s Libra Association. These withdrawals leave Libra with no major US payment processor denting a big hole in Facebook’s plans for a distributed, global cryptocurrency. David Marcus, Libra chief called this ‘no great news in the short term’.

Update Oct 4: After countries, PayPal, a corporate backer is backing away from Facebook’s Libra Association the company announced on October 4. “PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in a statement.

In a joint statement released last week, Friday, Facebook and Germany have agreed to block Facebook’s Libra In Europe.

France had been debating banning Libra for quite some time now. On Thursday at the OECD Conference 2019 on virtual currencies, French Finance Minister Bruno Le Maire told attendees that he would do everything in his power to stop Libra. He said, “I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil.” Le Maire also was in favor of Eurozone issuing its own digital currency solutions, commonly dubbed ‘EuroCoin’ in the press.

In a joint statement released Friday, the two governments of France and Germany wrote, “As already expressed during the meeting of G7 Finance Ministers and Central Bank’s Governers in Chantilly in July, France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince that risks will be properly addressed. We believe that no private entity can claim monetary power, which is inherent to the sovereignty of Nations”.

In June, Facebook had announced its ambitious plans to launch its own cryptocurrency, Libra in a move to disrupt the digital ecosystem. Libra’s launch alarmed certain experts who foresee this as a control shift of the economy from governments and their central banks to privately-held tech giants.

Co-founder of Chainspace, Facebook’s blockchain acquisition said that he was “concerned about Libra’s model for decentralization”. He added, “My concern is that Libra could end up creating a financial system that is *less* censorship-resistant than our current traditional financial system. You see, our current banking system is somewhat decentralized on a global scale, as money travels through a network of banks.”

The US administration is also worried about a non-governmental currency in the hands of big tech companies. Early July, the US Congress asked Facebook to suspend the implementation of Libra until the ramifications were investigated. In an interview to Bloomberg, Mu Changchun, deputy director of the People’s Bank of China’s payments department wrote, “As a convertible crypto asset or a type of stablecoin, Libra can flow freely across borders, and it “won’t be sustainable without the support and supervision of central banks.”

People enthusiastically shared this new development on Twitter.

“Europe is leading the way to become the blockchain hub”

“I always thought China would be first off the blocks on regulating Libra.”

“France blocks libra and says not tax for crypto to crypto exchanges. America still clinging on and stifling innovation hurting investors and developers”

For now, a working group has been tasked by the G7 Finance Ministers to analyze the challenges posed by cryptocurrencies. Its final report will be presented in October.

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