France and Germany oppose Facebook’s proposed Libra cryptocurrency

The Libra cryptocurrency faces new roadblocks. In a setback for Facebook’s planned currency, the finance ministers of France and Germany issued a joint statement opposing its launch.

They claimed that virtual currencies were risky for consumers, financial stability, and the monetary sovereignty of European states.

“France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince that those risks will be properly addressed,” they said.

The ministers issued the statement after a joint meeting of Eurozone finance ministers at Helsinki.

The ministers supported the creation of an ECB backed digital currency that would cut banks’ fees. “We encourage European central banks to accelerate work on issues around possible public digital currency solutions.”

ECB considering an alternative public cryptocurrency

To make matters worse for Libra, the European Central Bank announced it was developing its own public digital currency.

According to ECB board member Benoit Coeure, Libra’s plans had been a “wake-up call.”

He added that the ECB needed to step up its thinking on a central bank digital currency.

The project would introduce electronic cash which consumers could directly deposit into the ECB. There would be no need for bank accounts or other financial intermediaries. This disintermediation would slash transaction costs.

However, though work on the ECB digital currency had commenced before Libra, the project could take months or even years.

The Response on Libra Cryptocurrency

The Libra Association welcomed the development. It said its members would work with regulatory authorities to achieve a desirable implementation of the Libra project.