The Swiss President had stated that the Libra project led by Facebook, which aims to create a global currency with its stablecoin, has failed. Libra’s currency would be backed by a basket of fiat currencies, including the US dollar, the Chinese renminbi and the British pound.
I do not believe Libra has a chance in its current form because central banks will not accept the currency basket that underpins it.
said Swiss Finance Minister and President Ueli Maurer to Swiss broadcaster SRF. In the interview Maurer added, “In this form the project has failed.”
Maurer’s comments hit particularly close to home because Libra is headquartered in Switzerland. In September the Libra Association announced it would apply to the Swiss Financial Market Supervisory Authority (FINMA) for recognition as a payment system and requested further guidance on next steps. Maurer is the latest European finance official to publicly question the project.
Speaking to reporters at the IMF and World Bank meetings in Washington in October, Germany’s Finance Minister Otto Schulz said he was “very skeptical” of Libra and that he did not support the creation of such a global currency, saying this responsibility belongs to democratic states. France’s Finance Minister Bruno Le Maire reiterated in September his concerns that Libra could undermine central banks’ “monetary sovereignty.”
Internal disputes within the Libra Association also prompted several high-profile members, including PayPal, Visa, eBay and Mastercard, to withdraw from the project. According to the CEO of Ripple, Libra faces a fundamental trust problem because of its direct connection to the tech giant Facebook. Facebook has previously been involved in numerous data scandals that were never fully investigated or resolved.
Many of those data breaches remain unaddressed to this day. Trust is a crucial element in finance: people worldwide will only adopt a payment system if they trust it. Although Facebook could potentially reach more than 2 billion users globally, the project remains far from ready for deployment. Before an official launch, Libra faces the major challenge of winning the trust of potential users. It remains to be seen what additional measures Facebook will take in the near future.
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