July has not been a good month for Facebook’s Project Libra. After riding a wave of favorable press attention in June after its major announcement, Libra has endured a week or two of scorn from global government officials and regulators, as it seems that nearly every critic has come out of the woodwork to cast aspersions on what some have called Facebook’s “hubris”. After a round of attacks in the United States, lead by none other than President Trump and his infamous tweet storms, there has been an apparent tag-team match where his Treasury head has scoffed at the notion of Libra, while Congressional hearings gave Senators and Representatives a chance to blast away.
This round of acrid critiques, however, is by no means U.S.-centric. Officials across the globe are speaking out, as if a grand conspiracy had been hatched to stop Mark Zuckerberg in his tracks. The newest voices come from Europe, where both German and French finance ministers have registered their negative opinions for the record. Such a large groundswell of negativism has also had a severe impact on market prices for all cryptos, as well. Bitcoin fell 13.3%, its second largest drop this year, falling below $9,500, but it has gradually clawed its way back, hovering about $10,600, at this writing.
German Finance Minister, Olaf Scholz, passed along his concerns to Reuters, which published this quote:
The issuance of a currency does not belong in the hands of a private company because this is a core element of state sovereignty. The euro is and remains the only legal means of payment in the euro area.
Germany is not alone. As was reported:
The quote was taken just days before Germany attends the G7 Summit. The summit will feature several countries that have publicly questioned Facebook’s new development. In fact, France is now forming a cryptocurrency task force comprised of G7 member countries. The task force will try to ensure the proper regulation of digital currencies.
French officials did not wait for the June Libra media circus to come to a close before acting, having actually started to ask others to join its quickly formed task force. After Facebook’s original announcement, French Finance Minister Bruno Le Maire took to the airways declaring that Libra’s attempt to become a sovereign currency “must not happen”. Soon thereafter, Banque of France governor, Francois Villeroy de Galhau, stressed that: “We want to combine being open to innovation with firmness on regulation. This is in everyone’s interest.”
In other related actions, both France and Germany have let it be known that they favor and would vote for Mark Carney, the present chair of the Bank of England, to replace Christine Lagarde’s post as head of the IMF, after she replaces Mario Draghi, who will soon step down from the chairman’s job at the European Central Bank. Carney has been negative in the press regarding cryptocurrencies and is also on the record for wanting cryptos to comply with the “highest standards of regulations”.
Libra has also taken it on the chin in India, which was supposed to be its first test market and to demonstrate many material benefits for the Indian diaspora across the globe, which regularly sends cross-border payments back home for family use. India currently has a quasi-ban on cryptos. The country’s central bank has forbid all banks from supporting any crypto-related entity, including crypto exchanges. India’s Economic Affairs Secretary Subhash Garg does not see the national debate changing in favor of Libra: “Design of the Facebook currency has not been fully explained. But whatever it is, it would be a private cryptocurrency and that’s not something we have been comfortable with.”
While the backlash continues overseas, Libra is facing growing resistance back home in the U.S. President Trump minced no words in his tweets: “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air… Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability.”
U.S. Treasury secretary Steven Mnuchin went so far as to describe the Libra effort as a threat to national security:
This is indeed a national security issue. Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking. Facebook’s Libra could be misused by money launderers and terrorist financiers.
What voices of dissent have yet to be heard? Perhaps, next week will bring a new round of “acid rain”, but the message that policymakers are clearly making is that Libra will not be on anyone’s fast track. Numerous hurdles have been thrown in its path that will take a great deal of time to sort out before we ever see a Libra Coin in the global marketplace.