- IMF conference sees French economy minister announce that steps will be taken to block the development of beleaguered Facebook cryptocurrency Libra
- G7 also hits out at blockchain, and claimed that rigorous regulatory standards would be required before Libra could be supported
- "We will not allow a private company to have the same power, the same monetary power as sovereign states", says minister
A further blow has been served to the plans by Facebook to become a major leader in the online money transfer space.
The blow came after major groups of powerful countries announced that they would take steps to block it – although there was no clear set of steps outlined as to how this would happen.
Three of the leading European G7 countries – France, Italy and Germany – have all said that they would take unspecified steps to prevent Libra from operating in Europe.
"We will not allow a private company to have the same power, the same monetary power as sovereign states", said Bruno Le Maire, who serves as the economy minister of France.
"The major difference between Facebook and governments is that we are subject to democratic control that is the control of the people”, he also said.
He made his remarks at an International Monetary Fund event in Washington DC.
According to press reports, he also claimed that Libra could undermine “national sovereignty”.
In addition, the German Finance Minister Olaf Scholz said that he felt that a desire for cross border payments to be made easier and more cost-effective was not enough justification for national autonomy to be undermined.
The wider G7 group has also made pronouncements about Libra.
The group announced that any reserve-backed digital currency – which is what Libra proposes to be – would have to go through a process of complex legal backing and rules before it could be approved.
There have been a wide range of problems facing Libra in recent weeks.
The cryptocurrency was in theory supposed to be supported by an organisation which calls itself the Libra Association.
However, the Association appears to have been largely undermined by the decision of several of its leading members, including MasterCard and Visa, to pull out.
Its long term future now appears to be hanging in the balance, especially with the decision of the banks to leave the Association – and of the governments to say they intend to block its development.
However, David Marcus, an executive who leads the project, has appeared to suggest that the rise of China could occur if blockchain-based solutions were not found.
“The future in five years, if we don’t have a good answer, is basically China re-wiring [the rest of the world] with a digital renminbi running on their controlled blockchain”, Marcus said.
He warned that “a whole part of the world completely blocked from US sanctions and protected from US sanctions and having a new digital reserve currency” could be created.
To learn more about how schemes such as Libra may be about to change the international money transfer scene, keep an eye on our magazine news pages.
