Swiss finance minister Ueli Maurer says Facebook's Libra digital currency project “Failed in its current form”, according to an interview published Friday December 27 by the Swiss chain SRF.
“The central banks will not accept the basket of currencies” on which libra is supposed to rely, said the man who is also the outgoing president of the Swiss Confederation, a largely symbolic function. This statement is yet another blow to the social media giant's project, which is supposed to see the light of day in 2020 but has been heavily contested by the authorities for months.
The libra will in theory be managed by an independent association of Geneva-based companies and non-profit organizations. But in early October, PayPal and then Stripe (as well as Visa, Mastercard and others) withdrew from the project, under increasing pressure from US and foreign regulators.
They are concerned about the potential malicious uses of the currency, and point to the California internet giant’s bad reputation for privacy and the protection of personal data. States and central banks also fear losing their sovereignty: they are for the moment the only ones to have the right to mint money.
Risk to the global financial system
In October, French Minister of Economy Bruno Le Maire announced with his German and Italian counterparts “A number of initiatives to make it clear that Libra is not welcome in Europe, because it is our sovereignty that is at stake”.
Ten days ago, an official from the US Federal Reserve (Fed) again expressed her fears. “Without the required collateral, stable digital currency networks (backed by a currency or basket of currencies) worldwide can put consumers at risk”, said Lael Brainard in a speech in Frankfurt (Germany).
The size of Facebook – with around 2.2 billion people connecting to at least one of its platforms (Instagram, WhatsApp, Messenger, Facebook) every day – implies that the new currency could disrupt the global financial system and render the more difficult task for central banks, had already observed the president of the Fed a few months ago.
Questioned in October by the Parliamentary Financial Services Commission to the US Congress, Facebook boss Mark Zuckerberg said the libra would not be launched until it has received all the green light from regulators.