Cryptocurrency is finally becoming a major topic of discussion for the world’s top finance regulators thanks to Facebook’s Libra project. At the July 18th meeting of the G7 finance ministers held in Chantilly, France, officials expressed serious concerns about the high-profile cryptocurrency project.
French Finance Minister Bruno Le Maire, who is hosting the G7 event, took a deeply skeptical position on Libra’s launch, suggesting that the new payment system could represent a serious threat to global finance. Le Maire warned that the scale of the Libra project would be comparable to the creation of a “private state,” adding that it could potentially jeopardize the financial sovereignty of existing countries.
“We won’t allow private states to emerge that would have the same privileges of a state but without the controls that go with it,” Le Maire told reporters.
Le Maire’s criticism isn’t exactly unfounded, as the Libra Association is backed by some of the biggest names in finance, including Visa, MasterCard, Stripe, and PayPal. Major companies such as eBay, Uber, Lyft, Spotify, Vodafone, and Coinbase are also listed as Libra Association members. Should Libra prove to be an effective payment platform and gain a foothold in the global currency market, it could give these corporations far more influence over international finance than they currently possess. Given that Facebook alone has unrestricted access to around 2.3 billion users, with many of those having limited access to traditional banking services, Libra could easily become the single largest financial network on the planet shortly after launch.
While most of the G7 representatives seemed to take a dim view of Libra, Germany’s Central Bank President Jens Weidmann seemed cautiously optimistic about it. In an interview with news agency DPA, Weidmann said “[Libra] could be quite attractive for consumers if they keep to what they have promised.”
The G7 members face another serious challenge this week, as France’s proposed 3% tax on major tech companies is causing new divisions between the traditionally friendly governments of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. U.S. Treasury Secretary Steven Mnuchin, representing the Trump administration, has strongly objected to the French tax plan. Given that Libra is supported by several of the same U.S.-based tech giants that would be impacted by the French tax, its possible that the still-in-development cryptocurrency could dramatically complicate these high-level discussions.