France: We can't allow Facebook's Libra in Europe

PARIS (Reuters) - Facebook’s Libra cryptocurrency cannot be allowed to operate in Europe while concerns persist about sovereignty, systemic financial risks and the risk of abuses by a dominant market player, France’s finance minister said on Thursday.

FILE PHOTO: Small toy figures are seen on representations of virtual currency in front of the Libra logo in this illustration picture, June 21, 2019. REUTERS/Dado Ruvic/Illustration

The world’s largest social media network announced plans in June to launch the new currency as it expands into e-commerce but Libra has come under fire from regulators around the world who fear it could destabilize the global financial system.

The minister, Bruno Le Maire, did not spell out how France could keep Libra out of the 28-member European Union.

He also said he had been in touch with both the incoming and outgoing heads of the European Central Bank about setting up a “public digital currency” under the aegis of international financial institutions.

Talking about the Libra project at a meeting of the Organization for Economic Co-operation and Development in Paris, Le Maire said: “This eventual privatization of money contains risks of abuse of dominant position, risks to sovereignty, and risks for consumers and for companies.”

Dante Disparte, head of policy and communications for the Libra Association, said it welcomed the scrutiny and that it was committed to working with regulatory authorities.

“The comments today from France’s economy and finance minister further underscore the importance of our ongoing work with regulatory bodies and leadership around the world,” he said in a statement.

Le Maire’s comments are the latest in a string of criticism about the project from policymakers and regulators from the United States to Europe.

The Group of Seven advanced economies warned in July that it would not let Libra proceed until all regulatory concerns have been addressed, saying that a prolonged discussion over the project may first be required.

In another setback this week for the Geneva-based Libra, Switzerland said the proposed payments system could face strict rules that typically apply to banks, on top of tough anti-money laundering laws.

Libra has said it planned to apply to become a licensed payments system in Switzerland, which is not a member of the European Union.

“Libra also represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption,” Le Maire said.

“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.”

A Libra spokeswoman did not immediately respond to Reuters questions on whether it was seeking to be regulated or licensed by any countries in the European Union.

Reporting by Leigh Thomas in Paris; additional reporting by Tom Wilson in London; writing by Christian Lowe; editing by David Clarke