Writing in a Financial Times op-ed on Thursday, Bruno Le Maire said the Facebook-led project is usurping the sovereign right of states to issue their own currencies, which will have dramatic and unforeseen repercussions.
France’s economic and finance minister says Libra is “unacceptable”, calling it an intrusion into the state’s political sovereignty.
The Libra Association signed its formal charter earlier this week in Geneva along with 20 other members.
When the euro was created in 1999, member nations surrendered aspects of their sovereignty to a greater European project. To allow Facebook and other Libra Association members to issue private money would undermine this effort, he said.
“Do we really want to give private interests such power, given the consequences it would have on trade and financial stability?” Le Maire asked. “I cannot countenance one of a sovereign state’s most powerful tools, monetary policy, falling under the remit of entities not subject to democratic control.”
Le Maire reiterated the sentiments on Twitter, saying: “Neither political nor sovereignty can be shared with private interests.”
The non-democratic nature of Libra’s privately issued currency – which Le Maire argued is a threat to national currencies in both underdeveloped and developed countries – was also cited as an issue:
“The monetary sovereignty of states is underpinned by their citizens’ freedom of choice.”
To counter the threat from Libra, Le Maire called for the development of “innovative national and cross-border payment methods”, as well as the development of central bank digital currencies “in the medium to long term.”
“We cannot let China be the only player in this field”, he added.
Le Maire has previously said France would seek to block Libra in the EU, as did Germany’s finance minister, Olaf Scholz. Also noting the need for improved payment rails, Scholz called for an e-euro to strengthen the EU bloc amidst economic globalization.
Facebook’s Marcus Says China Wins with Digital Renminbi if U.S. Nixes Libra
David Marcus, Facebook’s top executive on the Libra project, said China will create a digital currency system that could be entirely out of reach for U.S. authorities.
Marcus warned that Washington risks “having a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency”, according to an interview with Bloomberg News.
“The future in five years, if we don’t have a good answer, is basically China re-wiring” a large part of the world “with a digital renminbi running on their controlled blockchain”, Marcus said.
China has been stepping up its efforts to push forward with its Digital Currency Electronic Payment (DCEP) since Facebook’s unveiling of Libra in June.
Chinese central bank officials have emphasized that one of the goals for China’s cryptocurrency is to preempt the rise of Libra that would reinforce the dollar dominance in the international financial system.
While Libra would be pegged to a basket of fiat currencies, excluding China’s renminbi, one of the five reserved fiat currencies accepted by the International Monetary Fund (IMF) for international transactions.
China’s DCEP had been in the works, but the project’s development accelerated after Libra was announced.
The People’s Bank of China appointed Mu Changchun to lead the Research Institute on Digital Currency in September and detailed a proposal to launch and distribute the national coin among major Chinese commercial banks.
Facebook’s crypto initiative has met with resistance from the U.S. Senate and the Federal Reserve, since it was announced in June. Five major partners, including PayPal, MasterCard and Visa, withdrew their support this month due to the business and regulatory challenges.
