Facebook Heads for New Libra Talks this Monday
Facebook will have to address the concerns of European Union officials about the Libra cryptocurrency.
Facebook will have to answer and assuage the concerns of European Union regulators in a new round of talks scheduled for Monday, reported Reuters. The meeting to be held in Basel will gather representatives of 26 central banks, which will ask pointed questions about Libra’s design.
Libra representatives will answer before the Committee on Payments and Market Infrastructure of the Bank of International Settlements.
Until now, only separate concerns were voiced by central bankers and officials regarding Libra’s potential to disrupt the EU’s monetary policy, or affect separate countries. The influence of Libra as a competitor to fiat money is one of the biggest concerns.
Facebook has also faced a backlash based on previous reports of mishandling user data, as well as privacy concerns.
The EU will set a very high bar for regulatory approval, stated Benoît Coeuré, of the European Central Bank, who will also head the meeting. The mood of European regulators was already set during a recent Helsinki meetup of European finance ministers. The EU countries’ representatives shared “strong concerns” that Libra could destabilize local financial systems.
Aside from the EU, Facebook has been serious about facing the requirements of US regulators. Previously, representatives of the Libra project have stated that there will not be a partial, regional launch until US regulators are satisfied with the plans.
Libra will be backed by a basket of currencies, including the euro. This means that specially appointed entities will mop up fiat from the economy, and hold it, exchanging it for Libra. It is unknown what size this operation may have, and whether it would challenge liquidity or banks’ monetary policy.
In general, fintech money handlers always face some limitations on turnovers and on holding cash.
At the same time, the EU has been rather lenient about the crypto space. As long as compliance is assured, money handler licenses have been issued to multiple cryptocurrency companies. Local regulations in Estoina and Lithuania are especially suitable for crypto startups, with extreme ease of starting business.