Representatives of the Libra Association, Facebook’s blockchain network, will today face tough questions from disgruntled central banks at a conference for global stable coins in Basel, Switzerland.
The conference sees the Libra Association, JP Morgan and Fnality International answer questions about regulatory issues posed by BigTech-funded stablecoin initiatives by senior officials from the Bank of International Settlements’ Committee on Payments and Market Infrastructures (CPMI).
The meeting is chaired by Benoît Coeuré, an executive from the member's board of the European Central Bank. Other members of CPMI include the Federal Reserve, the Bank of England, the European Central Bank, and the People’s Bank of China.
Libra won’t get an easy ride. "As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system," said Mr. Cœuré in a press release today. "They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high."
A speech on Libra earlier this month from Yves Mersch, also an executive on the board, said that the Libra Association is “cartel-like” in its aims to reduce central-bank authority. “[Libra] could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role, for instance by reducing demand for it,” he said.
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"The Libra Association participated in constructive dialogue with policymakers during the G-7 conference,” Dante Disparte, Head of Policy and Communications for the Libra Association, told Decrypt. “Our goal is a stable, secure, low-cost payment system that can expand access and improve financial services for billions of people. We are committed to ongoing engagement with central banks and financial regulators as we work toward that goal,” she said.
Last week, Facebook announced intentions to apply for a payment license from the Swiss banking authority, FINMA, and asked for more clarity over regulations. But in his speech at the beginning of the month, Mersch warned Europe away from “the beguiling but treacherous promises of Facebook’s siren call.”
Mersch’s concerns were met by France’s Economy and Finance minister, Bruno le Maire, who said in front of an OECD conference on cryptocurrencies: “I want to be absolutely clear: In these conditions, we cannot authorize the development of Libra on European soil." The Bank of France is part of the CPMI.
"It's important for regulators to coordinate and come to a common understanding,” said Agustín Carstens, General Manager of the Bank of International Settlements in a press release today.
The group will produce a final report on its work by mid-October.