The bank is worried that the currency will be difficult to regulate and that it could potentially harm the existing financial system.
“It will move money into an absolutely virtual world, so it is completely different than other forms of digital payment,” an unnamed BOJ official is quoted as saying.
Some are worried that the fact that Libra could be tied to several national currencies means that Facebook is trying to avoid being under control from any particular country.
Haruhiko Kuroda, the governor of the BOJ, said that he’s going to “keep careful watch” on how cryptocurrencies will affect the payments status quo, and whether they’ll become everyday payment methods.
There’s also the worry that Japanese money paid to Facebook to buy Libra would then get put into Japan’s bigger banks by Facebook, which could harm smaller ones. Also, more demand for government securities because of Libra could cause interest rates to dip, and that could also potentially hurt the country’s economy.
Another BOJ official said that Libra would essentially be “piggybacking for free on a financial system that takes heavy costs,” meaning that Libra will be operating with banks and firms that have to bear the burden of compliance and regulatory costs.
In the United States, there have been voices calling for Facebook to stop the project until it has a chance to be examined more closely. Some lawmakers wrote a letter to Facebook expressing concern about past issues with data and privacy. They also talked about how Libra could operate as a brand new global currency.
“It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy,” the lawmakers wrote.