Date
21 October 2019
Finance ministers and central bank governors from the G7 group of advanced economies meet in Chantilly, north of Paris, on Wednesday. Photo: Reuters
Finance ministers and central bank governors from the G7 group of advanced economies meet in Chantilly, north of Paris, on Wednesday. Photo: Reuters

G7 finance chiefs pour cold water on Facebook’s Libra plans

Group of Seven finance chiefs cast a cloud over prospects for Facebook’s Libra digital coin, insisting tough regulatory problems would have to be worked out first, Reuters reports.

The massive social media company’s plan to launch a digital coin has met with a chorus from regulators, central bankers and governments saying it must respect anti-money-laundering rules and ensure the security of transactions and user data.

But there are also deeper concerns that the powers of big tech companies increasingly encroach on areas belonging to governments, like issuing currency.

“The sovereignty of nations cannot be jeopardized,” French Finance Minister Bruno Le Maire told journalists after chairing the first day of the two-day meeting.

“The overall mood around the table was clearly one of important concerns about the recent Libra announcements, and a shared view that action is needed urgently,” he added.

German Finance Minister Olaf Scholz said Facebook’s plans do not “seem to be fully thought through”, adding that there were also data security questions.

“I am convinced that we must act quickly and that [Libra] cannot go ahead without all legal and regulatory questions being resolved,” Scholz told journalists.

France, which chairs the Group of Seven advanced economies this year, has asked European Central Bank executive board member Benoit Coeure to set up a G7 task force to look into cryptocurrencies and digital coins like Libra.

Coeure presented a preliminary report to ministers and central bankers at the meeting, in the quaint chateau town of Chantilly, north of Paris.

Central bankers say that if Facebook wants to take deposits, it needs a banking license, which would subject it to the strict regulation that goes with operating in that industry.

Some central bankers also say that allowing people to transact anonymously is a non-starter given financial sector regulations that require payments firms to hold basic information about their customers.

Bank of Japan Governor Haruhiko Kuroda said the G7 task force was likely to evolve over time into something including a broader range of regulators beyond the group, given the huge impact Libra could have on the global economy.

“If the Libra is aspiring to be used globally, countries must seek a globally coordinated response,” Kuroda said.

“This is not something that can be discussed among G7 central banks alone.”

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RC/CG