Facebook faces 26 EU banks today according to a report by the Financial Times. The Company will be answering questions posed by the EU officials regarding Libra.
Facebook will be quizzed by 26 EU banks today with regard to the impact of Libra. Libra is the cryptocurrency token from Calibra Foundation, a subsidiary of Facebook. It is a stablecoin pegged to the US dollar. Facebook intends it to be used as a global payments system very similar to Ripple’s XRP.
Libra Representatives will be meeting EU officials from 26 banks in Basel to discuss the regulations around cryptocurrency. In particular, the discussions will cover Libra and the regulatory requirements to be allowed in the EU. Calibra Association is headquartered in Switzerland.
Benoît Coeuré, of the European Central Bank who will chair the meeting, has warned “the bar for regulatory approval will be very high” for Libra to operate in the EU. In multiple venues, he has called for increased scrutiny of Libra and the disruption it could possibly unleash on EU markets. Libra will function like a payment system, bypassing banks and other regulations related to banking. Transaction fees will be low as it is a cryptocurrency. The fear of many central banks is the collapse of the banking structure and consequently the economy if it is not regulated.
Mr Coeuré will chair the meeting between Libra and the Committee on Payments and Market Infrastructure, a forum that is part of the Bank of International Settlements, on Monday.
Libra’s representatives, which will include the founders, have been invited to answer questions related to control and regulation of Libra. The main contention is that Libra is not free for everyone to access and is centralized in Facebook’s hands. Facebook is not trusted in government circles ever since the cambridge analytica scandal where it was used to influence elections. The company has not been very transparent when it came to its data storage practices. The US Senate was vocal about its distrust of Facebook and accused it of trying to be a bank without going through any regulation.
The meeting will inform a report submitted to the G7 leaders meeting in October.
“In the nearly three months since the intent to launch the Libra network was announced, we have prioritised engagement with regulators and policymakers around the world,” Libra said.
“We welcome this engagement and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.”
“Under the current conditions, we should refuse the development of Libra in the EU”, said Mr Le Maire.
“There are certain concerns about the financial stability implications. The risks need to be fully understood and the EU needs to act in a unified way”, said Mr Dombrovskis.
An EU Solution
To combat the threat of Libra, Mr Le Maire had made a statement that the EU needs its own cryptocurrency to make payments faster and cheaper. The “EuroCoin” has been proposed as a framework to bring into play competitors to the Libra. If the EU governments can hammer out a proper framework to regulate cryptocurrencies, Libra may be looking at a tough time in European markets.