In a Twitter thread on Monday, David Marcus, who co-created Libra, said he wanted to “debunk” that notion – one most notably promoted by France’s Economy and Finance Minister, Bruno Le Maire.
The head of Facebook’s Calibra – the entity created by Facebook to provide financial services including a digital wallet for the planned Libra cryptocurrency – has spoken out in response to claims from authorities that the project poses a threat to nations’ “monetary sovereignty.”
Le Maire said last Thursday that, with Libra, “The monetary sovereignty of states is under states is under threat”, and further threatened to block the project’s development in the EU.
Marcus said that Libra will be “backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve.” As such, Libra will not be creating new money. That function will “strictly remain the province of sovereign nations”, he said.
The Calibra chief further clarified that Libra is being built to be a “better” payment network utilizing national currencies, and “delivering meaningful value to consumers all around the world.”
Marcus welcomed the attention from regulators, however, saying:
“We believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable.“
His comments come as a group of 26 central banks – including the European Central Bank, the U.S. Federal Reserve and the Bank of England – meets in Switzerland to grill the Libra Association over the scope and design of the project.
In the thread, Marcus also pledged to continue working with “central banks, regulators, and lawmakers to ensure we address their concerns through Libra’s design and operations.”
German Finance Minister Says Gov’t Must Reject Facebook’s Libra Coin
German Finance Minister Olaf Scholz stated that policymakers cannot accept parallel currencies such as Facebook’s proposed Libra stablecoin.
Prevent stablecoins from becoming alternative currencies
As reported by Reuters, on Sept. 17, German Vice Chancellor and Finance Minister Olaf Scholz said during a panel discussion in Berlin that Facebook’s planned crypto coin Libra will be clearly rejected. He said:
“We cannot accept a parallel currency. … You have to reject that clearly.”
According to a document seen by Reuters, German regulators are working closely with their European and international allies to make sure stablecoins will not become alternatives to traditional currencies. The document reportedly read:
“The Federal Government will work at European and international level to ensure that stablecoins will not become an alternative to official currencies”
The German government has spoken out against Facebook’s Libra project before. On Sept. 13, German parliamentarian Thomas Heilmann stated that the government will block projects like Libra, claiming that the authorities are not planning to allow any market-relevant private stablecoins, following in France’s footsteps.
Libra is no threat to the global financial system
Meanwhile, David Marcus, head of Calibra, was attempting to defuse Libra’s perceived threat to the global financial system yesterday.
Marcus pointed out during a meeting between Libra founders and 26 global central banks in Basel that Libra’s cryptocurrency project does not intend to form a new currency but rather build a “better payment network and system running on top of existing currencies” to deliver meaningful value to users over the globe. He emphasized that there is no new money creation, which will “strictly remain the province of sovereign Nations.”