Swiss minister says Facebook's Libra has 'failed' in current form

Yahoo – AFP, Julie JAMMOT, December 28, 2019

Swiss president and finance minister Ueli Maurer, pictured September 2019, has
called Facebook's planned Libra cryptocurrency a "failed" project (AFP Photo/
Johannes EISELE)

San Francisco (AFP) - The Swiss president and finance minister has delivered the latest blow to Facebook's planned Libra cryptocurrency, saying it has "failed in its current form," Swiss network SRF reported Friday.

"The central banks are not going to accept the basket of currencies" that Libra is supposed to be based on, Ueli Maurer, who is in his final days in the rotating presidency of the Swiss Confederation, Switzerland's federal council, told SRF.

Libra, a high-profile project of social network giant Facebook, is tentatively scheduled for a 2020 launch but has faced months of severe criticism from some of the world's most influential financial authorities.

In theory, Libra will be managed by a Geneva-based independent association linking several companies and non-profit groups.

But since early October, the online payment companies PayPal and Stripe, as well as Visa, Mastercard and others, have withdrawn from the project amid growing pressure from American and other regulators.

They have cited the potential for illicit uses of the currency and have underscored the battered reputation of California-based Facebook in matters of privacy and data protection.

French Finance Minister Bruno Le Maire, pictured October 2019, has expressed 

serious concerns about Facebook's Libra project (AFP Photo/Andrew 

CABALLERO-REYNOLDS)

Loss of 'sovereignty'

Countries and central banks -- for now the only entities legally permitted to issue currency -- have also expressed concern about a blow to their sovereignty.

In October, French Economy Minister Bruno Le Maire bluntly expressed his concerns, saying, "Libra is not welcome on European soil."

"We will take steps with the Italians and Germans, because our sovereignty is at stake," he said, speaking in Washington on the sidelines of the fall meeting of the World Bank and International Monetary Fund.

Earlier this month, a US Federal Reserve official expressed American reservations.

"Without requisite safeguards, stablecoin networks at global scale may put consumers at risk," Fed Governor Lael Brainard said in a speech in Frankfurt.

Cryptocurrencies to date have suffered from "staggering" losses due to fraud and theft, Brainard said.

Facebook chairman Mark Zuckerberg, pictured October 2019, has said the Libra 

cryptocurrency will not be launched until it receives all needed approvals (AFP Photo/

MANDEL NGAN)

'Serious concerns'

Stablecoins are a type of cryptocurrency designed to provide stability -- avoiding the wild swings of bitcoin and other cryptocurrencies -- by being pegged to relatively stable assets or currencies.

Libra is designed to make it easy for users of WhatsApp, a Facebook-owned messaging platform, to instantly send funds to friends or family.

The size of Facebook -- 2.2 billion people worldwide connect on at least one of its platforms, which also include Instagram, WhatsApp and Messenger -- would give it the potential to disrupt the global financial system, making it far harder for central banks to manage, Fed chairman Jerome Powell told US lawmakers in July. He expressed "serious concerns."

The Libra association declined to comment when contacted by AFP.

But in October, Facebook CEO Mark Zuckerberg testified before a congressional committee that Libra would not be launched until it received all necessary authorizations from the authorities.

In response to regulators' resistance, Zuckerberg last month opened the door to scaling back plans for Libra if it cannot win the needed approvals.

New Facebook logo arrives as its 'family' grows

Yahoo – AFP, November 4, 2019

The move aims to highlight the Facebook "brand" which operates a range of apps and
services including messaging, photo-sharing, virtual reality and is developing wallets
for digital currency.

Facebook on Monday unveiled a new logo to represent the Silicon Valley company, distinct from its core social network.

The move aims to highlight the Facebook "brand" which operates a range of apps and services including messaging, photo-sharing, virtual reality and is developing wallets for digital currency.

The new branding, basically the company name in crisp lettering, will be stamped on its "family" of offerings including WhatsApp, Messenger, Instagram, Oculus, Workplace, Portal and Calibra, according to chief marketing officer Antonio Lucio.

"Today, we're updating our company branding to be clearer about the products that come from Facebook," Lucio said.

"We're introducing a new company logo and further distinguishing the Facebook company from the Facebook app, which will keep its own branding."

The new corporate logo "is a way to better communicate our ownership structure to the people and businesses who use our services to connect," Lucio added.

The move comes with Facebook under intense scrutiny from regulators around the world over how it polices content on its platforms, and with some politicians and activists seeking a breakup of Silicon Valley giants.

Since its start as a social networking application 15 years ago, Facebook has acquired Oculus virtual reality gear company as well as Instagram image-based social network. It has also launched Portal smart screens as well as a Workplace social network tailored for workplace productivity.

Its messaging applications WhatsApp and Messenger are each used by more than a billion people.

Facebook established a Calibra as a digital wallet for use with the proposed cryptocurrency Libra, which has been facing criticism from regulators and lawmakers in various countries.

Facebook's Marcus says Libra won't be controlled by a single company

Yahoo – AFP, October 20, 2019

Executives involved with Facebook's proposed Libra digital currency say they
will work with regulators to address their concerns (AFP Photo/Fabrice COFFRINI)

Washington (AFP) - Facebook executive David Marcus on Sunday tried to calm the fears of officials threatening to block its proposed digital currency, saying Libra won't be controlled by a single company.

The head of Facebook's Libra currency project sought to address the main issue raised by France's Economy Minister Bruno Le Maire: the potential for a company to have the power to undermine a government's control of its currency.

Marcus said it has been "very clear to us from the very beginning that a payment networks such as the Libra network shouldn't be controlled by one company."

Speaking at a forum, hosted by the Group of 30, he repeated the company's commitment to work with regulators to address their concerns.

He added that the Libra Association -- comprised of 21 companies -- will "welcome competition to benefit local access and strive for the lowest cost possible for consumers."

But, he cautioned, "the status quo is not an option any longer."

Central banks and government finance officials have long worried about the challenges posed by digital currencies, and the risk they can be used for money laundering and financing terrorism.

Libra is different from other digital currencies like Bitcoin because it would be a "stablecoin" tied to national currencies.

But Le Maire told reporters on the sidelines of the annual meetings of the World Bank and International Monetary Fund in Washington last week that European governments "will not allow a private company to have the same power, the same monetary power as sovereign states," and will take steps to block Libra from Europe.

Agustin Carstens, former Mexican central banker and longtime skeptic of digital currencies, agreed that technology can help provide access to the financial system to people who have been excluded.

But Carstens, now head of the Bank for International Settlements, said Sunday that the best course would be to "maximize the use of technology with what we've proven that works, that provides stability."

Marcus remained cautiously optimistic.

"We recognize that a change of this magnitude can't be operating without a great sense of responsibility," he said, but he added: "We can actually work together to solve these issues."

Group behind Facebook's Libra coin push meet in Geneva

RTL – AFP, 14 November 2019

Facebook had hoped backers of its Libra project would swell from an initial 28 to
"well over 100", but instead, several initial supporters have abandoned a
scheme which regulators say threatens the global financial system / © AFP/File

The Libra Association, created by Facebook to launch its new cryptocurrency, kicked off its first council meeting in Geneva on Monday, despite defections by previous supporters like Visa and Mastercard.

The meeting also comes as the planned Libra global currency faces swelling criticism from regulators, and reported warnings from the G7 group of nations that it poses a threat to the global financial system.

Following Monday's meeting, the non-profit association was due to announce its founding membership and provide more details on how it plans to proceed.

Last month, it voiced hope that the number of companies backing it when it opened for business would swell from an initial 28 to "well over 100" companies.

But instead the list has shrunk, after more of its initial backers abandoned the alliance amid swelling criticism from regulators around the world on the planned Libra global currency.

Credit card giants Visa and Mastercard, online marketplace eBay and digital payments firm Stripe each announced Friday they had changed their minds about being founding members of the association, following a similar recent announcement by digital payments firm PayPal.

Libra Association confirmed Friday that the companies would no longer be founding members, but said that it would continue building an alliance of businesses, social-good organisations, and others to implement the cryptocurrency.

Threat to financial stability?

The membership departures came after US senators sent letters to several financial firms noting that they could face "a high level of scrutiny from regulators" if they participated in the new currency plan.

French economy and finance minister Bruno Le Maire has warned that under current circumstances, Libra posed a threat to the "monetary sovereignty" of governments and could not be authorised in Europe.

Facebook executives have, however, claimed the new digital coin could help lower costs for global money transfers and help those without access to the banking system.

Facebook chief Mark Zuckerberg is set to testify at an October 23 hearing in the US House of Representatives on the Libra plan.

But in a fresh blow, a draft G7 report has outlined nine major risks posed by such digital currencies, according to the BBC.

The report, due to be presented to finance ministers at IMF's annual meeting this week, did not single out Libra but referred to "global stablecoins" with the potential to "scale rapidly" as posing a range of potential problems.

Stablecoins are seen as more steady than cryptocurrencies like Bitcoin, since they are pegged to traditional currencies such as the US dollar or the euro.

But the G7 draft report reportedly cautioned that such currencies could pose problems for policymakers setting interest rates, and could threaten financial stability if users suddenly suffer "loss of confidence" in the digital currency.

Randal Quarles, the head of the Financial Stability Board (FSB), which oversees regulation among G20 economies, also sent a letter to G20 finance ministers Sunday warning that "global stablecoins could pose a host of challenges to the regulatory community."

This, he wrote, was "not least because they have the potential to become systemically important, including through the substitution of domestic currencies."

"Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight," he insisted.

#UPDATE Facebook should not launch its global digital currency Libra until proper regulations are in place to handle the potential risks, the Group of Seven said https://t.co/bxC3TPd1wD pic.twitter.com/gM84FJ1yZ4

— AFP news agency (@AFP) 18 oktober 2019

Could cryptocurrency dethrone the dollar?

MSN – Yahoo, 1 September 2019 

Chris J Ratcliffe Bank of England governor Mark Carney has suggested that a
virtual currency could one day replace the dollar as king of the foreign exchange market

Bank of England governor Mark Carney has suggested that a virtual currency, modelled on Facebook's Libra, could one day replace the dollar as king of the foreign exchange market.

The BoE chief aired vague proposals for a so-called "Synthetic Hegemonic Currency" at the recent Jackson Hole Symposium of central bankers.

Here is a brief assessment of why the greenback is losing its lustre and the outlook for Carney's proposed new digital currency, which would be supported by major central banks around the world.

Why dollar dominance?

The dollar has been the world's reference currency since the Bretton Woods agreement in 1944, when various key units were fixed to the value of the greenback. It has retained its global supremacy ever since, thanks to the economic and political clout of the United States.

"The dominant currency is always that of the world's biggest political power," noted Philippe Waechter, head of research at Ostrum Asset Management.

The dollar accounted for almost 62 percent of global foreign exchange reserves in the first quarter of 2019, according to the International Monetary Fund.

The European single currency was second with 20.2 percent, while China's yuan comprised only two percent despite the country's rise to the rank of the world's second biggest economy behind the US.

Why is greenback losing appeal?

Although the dollar has lost its sparkle owing to globalisation and the changing world economic order, gyrations in the US unit still impact economies elsewhere.

"US developments have significant spillovers onto both the trade performance and the financial conditions of countries even with relatively limited direct exposure to the US economy," Carney said at the recent bankers' meet in Wyoming.

Alastair Pike Don't expect the US to let its currency dwindle without a fight

When the greenback appreciates, so do repayments for many emerging nations because their debts tend to be denominated in dollars.

The BoE chief, who steps down in January, added: "In the longer term, we need to change the game."

Central bank role?

The public sector, in the form of central banks, could instead provide the best support for a new virtual currency, according to Carney.

"It is an open question whether such a new (cryptocurrency) would be best provided by the public sector, perhaps through a network of central bank digital currencies," he said.

Yet central bankers and world leaders alike remain anxious over the current crop of virtual currencies because they are unregulated.

US President Donald Trump himself has lashed out at Bitcoin and Libra for being "based on thin air" and having no standing or dependability -- unlike the dollar.

Commentators believe Washington is unlikely to allow the greenback to lose its cherished status as the world's premier reserve currency.

"The United States will simply not allow it to happen without a fight. Nobody in its position would," said Rabobank analysts.

What about Libra?

The BoE governor meanwhile made explicit references to Libra -- a future cryptocurrency unveiled by social media giant Facebook in June.

Carney avoided all mention of Bitcoin, which is the world's most popular digital unit but has been plagued by volatility.

Libra, which aims to launch in the first half of 2020, will be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

Yet Libra has also attracted the ire of central bankers owing to its origin in the private sector.

"Central banks are a little annoyed by this (Facebook) bid to privatise currency," said Agnes Benassy-Quere, a researcher at the Paris School of Economics.

Whereas Bitcoin is decentralised, Libra will be co-managed by 100 partner firms including Facebook itself.

Official world foreign exchange reserves, divided by currency, converted to US dollars, in the first quarter of 2019 @AFPgraphics pic.twitter.com/B73vkAA4Ec

— AFP news agency (@AFP) 1 september 2019