“Depending on Libra’s level of acceptance and on the referencing of the euro in its reserve basket, it could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role,” Mersch said.
Since it is not backed by a lender of last resort and must be accountable to shareholders, public trust cannot be counted on, Mersch said.
“It is scheduled for release in the first half of 2020 by the very same people who had to explain themselves in front of legislators in the United States and the European Union on the threats to our democracies resulting from their handling of personal data on their social media platform,” Mersch said.
Given these challenges, European regulatory and supervisory authorities need to assert jurisdiction over Libra and garner global cooperation to mitigate its risks, he said.
“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favor of the beguiling but treacherous promises of Facebook’s siren call,” Mersch said.
Facebook said it simply wants to give the 1.7 billion people in the world without access to a bank account the ability to have one at no, or a low, cost. The “internet of money” is the mantra, making it as easy to send money around the world as it is to send a picture or video across the internet, but more securely, Facebook explained.
Digital currency and blockchain enthusiasts’ most common complaint was articulated by bitcoin booster and general crypto luminary Charlie Shrem. He said to forget the 1.7 billion unbanked — Facebook is really after disrupting and destroying bitcoin in specific, and blockchain innovation in general, with an ersatz offering of its own. Libra, he argued is really a wolf in sheep’s clothing.