ECB’s Mersch urges Europeans to ignore Libra’s “treacherous promises”
Yves Mersch a member on the board of the European Central Bank (ECB) has called on Europe to ignore Facebook’s (FB.O) “treacherous promises” concerning its Libra currency. Mersch maintained that the proposed digital currency threatened the ECBs ability to set monetary policy.
Libra was announced earlier this year and hopes to launch in 2020.
Backed by four official currencies and thus not a full cryptocurrency, the digital coin will be available to Facebook’s 2 billion users.
The looming introduction of a rival medium of exchange has struck fear into the hearts of many a central banker.
Whereas existing cryptocurrencies have to build a user base and brand awareness, at its launch Libra will be available to every user of the world’s most popular social media platform.
Libra is also seen as more serious a threat because it has support from 27 other major organisations such as; Visa, Mastercard, PayPal, Uber, Spotify, eBay and Vodafone, all of whom invested $10m to become founding members.
Mersch observed that Libra “could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role.”
The central banker described Libra’s highly centralised organisation structure as “extremely concerning” and observed that it is ultimately accountable to shareholders who are not seen a repositories of public trust.
Mersch referenced Facebook’s recent violations of user privacy and data and he stated: “I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favour of the beguiling but treacherous promises of Facebook’s siren call.”
Some would dispute the absolute soundness of the Euro or U.S. Dollar however no one can argue that Facebook have a pristine record when it comes to its users’ data, only last month it was ordered to pay a record $5bn fine from the Federal Trade Commission (FTC).
Facebook recently hired DC lobbying firm FS Vector to help ease the regulatory pressure it faces in the United States.
With equally intense scrutiny in Europe, it would appear that Mark Zuckerberg will need to hire a Brussels-based lobbying firm to even be able to make his ‘siren call’ to the European people.