Facebook to be quizzed by central banks over Libra cryptocurrency

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Facebook faces further scrutiny over its plans to launch its own currency, with representatives of the tech giant set to meet with global regulators on Monday.

Officials from 26 central banks will gather in Switzerland to question Facebook over its Libra cryptocurrency and the perceived threat it poses to global financial stability.

The meeting comes after French finance minister Bruno Le Maire said he would block the development of Libra in Europe as it poses a threat to “monetary sovereignty”.

Speaking at a conference on cryptocurrencies last week, Mr Le Maire said: “I want to be absolutely clear – in these conditions, we cannot authorise the development of Libra on European soil.”

Facebook first announced Libra earlier this year and intends to launch it at some point in 2020. It is being developed alongside some of the world’s biggest companies and financial institutions, including PayPal, Mastercard and Visa.

Cryptocurrency experts say that the interest shown in Libra compared to other cryptocurrencies like bitcoin and ethereum is due to Facebook’s involvement and the fundamentally different characteristics of the new currency.

“Cryptocurrencies are disruptive in the economy and bring many benefits to both consumers and investors alike. However, Libra differs from many cryptocurrencies as it is centralised in its nature against the founding member companies, in a similar way that fiat currencies are centralised against a central bank,” Ana Bencic, president of digital exchange Nexthash, told The Independent.

“Due to the ... circle of multi-billion dollar companies essentially managing their own currency, it is not surprising that central banks are cautious of money moving in this direction. It will be interesting to see the result of these talks and whether governments or Libra will make any adjustments to accommodate it within the online global economy.”

The meeting in Basel, Switzerland, will involve representatives from the Bank of England and the US Federal Reserve, according to officials who spoke with the Financial Times.

Facebook previously said that it welcomes feedback from global regulators, claiming that it announced Libra long before its intended release date in order to address any potential issues.

“In the nearly three months since the intent to launch the Libra project was announced, we have become the world’s most scrutinised fintech effort,” a spokesperson for Libra told The Independent last week.

“We welcome this scrutiny and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.”