The 16th of September will be an important day that will influence the fate of Libra, as the association’s representatives will meet with officials from the European Central Bank (ECB) in Switzerland. The meeting, at which 25 international central banks will also attend, is held in order to discuss the possible financial stability risks of Libra.
According to a Financial Times report, Libra will meet with representatives from the Committee on Payments and Market Infrastructure (CPMI). The CPMI is a part of the Bank of International Settlements (BIS) and includes 28 banks as members, including the Deutsche Bundesbank, Federal Reserve bank of New York, and the Bank of England.
Facebook’s Libra faced with unprecedented pressure since the social network has officially announced the launch of their cryptocurrency. With both governments and banks fearing that the project may be too influential and significant to be controlled by Facebook, especially due to recent data selling controversies, Libra is dealing with constant regulatory uncertainty.
A board member of the ECB, Benoit Coeure, recently stated that EU’s regulators plan on ‘setting a high bar’ in terms of regulatory approval for Libra and similar projects. The board member stated that the reason behind this is uncertainty concerning the possible financial instability caused by the cryptocurrency.
However, despite heavily criticizing the project, Coeure suggested that the ECB should create its own digital currency. He revealed that the Central Bank had already held discussions and started to work on a similar project prior to Libra’s announcement. Additionally, some sources suggest that Coeure will present a report on cryptocurrencies to finance ministers that are part of the G7. The report is expected to be released at some point in October.
At a meeting between finance ministers from the European Union in Helsinki, the French Minister of Finance said that the EU should have its own cryptocurrency that would ‘challenge’ Libra. Giving the potential national digital asset the moniker ‘EuroCoin’, Minister Bruno Le Maire surprised the cryptocurrency community.
However, the suddenly appearing notion should not be a surprise to the public, given that several Central Banks all across the world have in some way already revealed their interest in issuing cryptocurrencies. China, the second-largest economic superpower, has nearly finished its national cryptocurrency project, which may, according to the deputy director of the People’s Bank of China, launch in 2019.
If the launch would occur during this year, China would successfully deliver its large-scale crypto project before Libra does, as the latter project is planned to launch in 2020. However, it is questionable if Libra will even launch given the regulatory scrutiny it faces. A member of the German parliament, Thomas Heilmann, recently stated that the German government may block the launch of Libra, and any other similar projects.
PayPal issues a cautious statement concerning the future of Libra
While the Libra Association faces with external pressure, there are internal concerns from founding members as well. The vice president of the company’s investor relations, Gabrielle Rabinovitch, recently specified that the relationship between the Association and founding members represents a ‘non-binding commitment’. He added that the project will require a lot of work in order to bear fruit.
The Association is made out of 28 founding members, some of which include notable enterprises and corporations such as PayPal, Mastercard, Visa, and others. While all of them happily invested $10 million to become a part of the association, recent regulatory attention that pressured the project resulted in a few founding members rethinking about their support. An August report from the Financial Times revealed that up to three founding members are reconsidering their support, fearing that their own companies may deal with regulatory pressure.
Rabinovitch nonetheless stated that PayPal believes in the potential of Libra, whose possible use case aligns closely with the global payment processor. The vice president stated that the ambitions of both companies may ‘democratize access to capital’, bringing innovative financial frameworks to areas where traditional financial institutions are unavailable or don’t provide all of their services.