German Finance Minister Considers that Libra Should Be Prevented

The project has been objecting of controversy during the year. The recent exit of five important partners has generated distrust towards the initiative.

Facebook’s new crypto-project, Libra, has faced some problems from governments around the world against this idea; this is because they consider Libra a risk since the company has a lot of personal information about its users. Additionally, the exit of five of the most important partners: MasterCard, eBay, Stripe, and Visa is worthy to pay attention to.

The initiative of the social media giant generated immediate political opposition in Europe. For instance, French Finance Minister Bruno Le Maire recently said the digital currency should not be seen as a replacement for traditional currencies. Now, German Finance Minister comments that the asset should be prevented.

Olaf Scholz, the German official, criticized Facebook’s project. This way, he reaffirmed his previous statements about that topic. He claimed that the creation of a new global and digital currency should be prevented.

“We will carefully monitor the situation with all the means at our disposal. I am not in favor of the successful creation of such a world currency because that is the responsibility of democratic states”, he said.

The German civil servant spoke with journalists during some meetings at the International Monetary Fund (IMF) and World Bank, in Washington. He assured he is “worried” about the situation and the potential international risks of launching a global digital currency as Libra, which would be launched in 2020 if there are no more problems.

Other Negative Opinions

Recently, Le Maire called on the Group of Seven (G7) central bank governors, guardians of the monetary system, and other representatives to work in a report on Facebook’s project. His concerns, according to what he said, is privacy, money laundering and terrorism finance.

“This money will allow this company (Facebook) to assemble even more data, which only increases our determination to regulate the Internet giants”, Le Maire said in Parliament.

“It is out of question” that Libra “become a sovereign currency (…) It can’t and it must not happen”, he affirmed during a radial interview.

Similarly, Markus Ferber, a German member of the European Parliament, said Facebook could become a “shadow bank” and that regulators should be on high alert. This consideration is due to the social network has more than two billion users and its digital coin, Libra, could replace some traditional banks.

Also, The Group of Seven released a report where it argues that a digital asset like Libra should not be allowed to launch until the international risks they represent are addressed properly.

But Bitcoin is the most popular –and also the first- cryptocurrency which has 10 years of history. Nevertheless, it is not accepted for governments of countries like Iran so the way for Libra could be even worse.

Scholz said that the financial sector requires certain changes, but the autonomy of States should be respected. He added that stablecoins –which are anchored to fiat currencies or other assets- could represent a risk.

“There is a need for reform, nothing that cross-border payments in particular should become faster and cheaper, but without jeopardizing the autonomy of States”.

Currently, some crypto-users doubt whether Facebook’s project will really be launched after so many obstacles. The community wait for the outcome of the controversial history of Libra.

By María Rodríguez