The French Minister of Economy and Finance attacks Facebook

Bruno Lemaire, French Minister of Economy and Finance attacks Facebook's Libra. Here is his opinion published in the Financial Times on October 17, 2019 and included in his LinkedIn account.

"In 1992, it was by referendum that the French chose to join the common currency.This was a long democratic debate, fed, sovereignly decided by the people.The referendum procedure reminded us that money is not only a simple tool for transaction and commerce: it constitutes the heart of the sovereignty of the States From this point of view, the project Libra unveiled by Facebook affirms ambitions as much economic as political Libra is a further proof of the will of certain private interests to get their hands on the common good and to substitute themselves for the States.This is unacceptable economically and democratically.

Libra is the name given by Facebook and several large multinational partners to a global digital currency project. This currency must, according to its promoters, improve cross-border payments, which are often too expensive and too slow. It would rely on a network of nearly 2.5 billion users, customers of Facebook and its associates, who could acquire it through the payment of hard currency. These currencies would be accumulated in a reserve fund in the hand of a private association defending private interests.

This project raises huge risks. Not only the risks inherent in any financial activity: money laundering and terrorist financing, data and consumer protection, operational resilience. But also risks related to the global ambition of the project, which could lead to abuse of dominance and threats to financial stability. Today, the regulatory arsenal will not be able to circumscribe all these risks. Nor can it protect all those who use Libra, consumers and customers.

Does this mean that proper regulation would protect us from all the risks associated with the Libra project? The answer is no. Because Libra does not only raise issues of security and financial stability. Libra actually asks states to share monetary sovereignty with a private company. For the most fragile states, where the banking system is underdeveloped, citizens could simply abandon the use of the national currency for the benefit of the Libra, and only use dematerialized payments via their mobile phones. This is a possibility for example in some sub-Saharan states. Suffice to say that these states would be dispossessed of all monetary sovereignty in favor of Facebook.

But, more broadly, Libra could question the effectiveness and sovereignty of the monetary policies of developed countries. It would be enough for private actors to decide to change the Euro portion of the reserve fund so that our common currency depreciates or appreciates sharply. Do we really want to leave the value of our currency, with all the consequences that this has on our trade, in the hands of private interests? We can not accept that one of the most powerful instruments of state sovereignty, money, depends on the decisions of actors who are not subject to any rule of democratic control. Today, although the independence of the ECB is well guaranteed by the Treaties as a condition of the solidity of the Euro, its leaders remain nonetheless chosen by the democratically elected governments of the Euro Zone, and a dialogue with it is always possible. It is doubtful whether Libra's owners will have any dialogue with governments and central banks. This represents a moral hazard that we can not take. The counterpart of the monetary sovereignty of states is the freedom of choice of citizens.

Does this mean that we reject any technological change in financial matters? On the contrary. France has affirmed with the President of the Republic its determination to make the race in the lead on financial technologies. She defined an innovative Blockchain framework with the Pact Act. It is at the forefront of innovation and intends to remain so. France wants to favor a different route that responds to the legitimate aspiration of modernized, cheaper and more convenient payments. I offered my European partners and the G7 two very concrete projects.

On the one hand, we must immediately develop more innovative, faster and cheaper means of payment, at national level as well as in a cross-border context. European banks and payment actors have a key role to play in this area: their urgent mobilization is necessary. It is also true of our independence. On the other hand, we need to think about the creation of digital currencies of central banks. It will take time, but Europe can not leave China with the monopoly of reflection and decisions on this subject.

Our position is clear. We want to combine new financial technologies with respect for the sovereignty of states. Political sovereignty is not shared with private interests. Monetary sovereignty no longer ".

Read also: Libra under fire from US politicians, but the Bank of England offers hope.