France is to establish a G7 task force to research the potential negative impacts of a large, multinational company such as Facebook setting up its own currency.
The country’s central bank governor Francois Villeroy de Galhau echoed concerns voiced by Economic Minister Bruno Le Maire on Tuesday – the day Facebook announced it aimed to launch its own cryptocurrency called Libra.
Villeroy said at a meeting of finance industry officials, reported by Reuters on Friday, that the task force would be led by European Central Bank board member Benoit Coeure and that it would study a range of issues including money laundering laws and consumer protection.
We want to combine being open to innovation with firmness on regulation. This is in everyone’s interest
The presidency of the G7 nations – Canada, France, Germany, Italy, Japan, UK and US – is held on a rotating basis and currently resides with France.
Like many nations this week, France’s reaction to Facebook’s Libra announcement was one of caution.
Minister Le Maire said France would not oppose the launch of a native cryptocurrency as an instrument of financial transactions over Facebook’s many commercial portals. He issued a grave warning, however, against Libra becoming so big that it would act as a de facto sovereign currency.
The sentiment was echoed by many. Mark Carney, Bank of England governor also offered a cautious approach, saying Libra could be systemically important and must be regulated accordingly.
Russia’s Anatoly Aksakov, Chair of the Duma’s Committee on Financial Markets said on Thursday that Moscow could ban the Libra outright as it could pose a threat to the country’s financial system.
US officials have also been vocal on the matter, with Sherrod Brown – Senator for Ohio and member of the Senate Banking Committee – saying:
We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.
Villeroy said the G7 task force would have to study a number of issues before it could be sure the Libra should be launched.
Facebook intends Libra to be a so-called “stabecoin”, backed by and its value determined by the market moves of a basket of five sovereign currencies. But Villeroy said the concept of a “stable” cryptocurrency must be defined, as must the stability of the instruments it is fixed against.
He also suggested forming a network of national anti-money laundering bodies to be co-ordinated by the European Banking Authority.