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Mon Sep 2, 2019, 12:24 PM

Europe should ignore 'treacherous promises' of Facebook's Libra currency: ECB's Mersch

Technology News
September 2, 2019 / 3:17 AM / Updated 8 hours ago

FRANKFURT (Reuters) - Facebook’s (FB.O) proposed Libra currency could undermine the European Central Bank’s ability to set monetary policy and Europe should ignore its siren call of “treacherous promises” ECB board member Yves Mersch said on Monday.

Facebook announced Libra — a new digital coin backed by four official currencies and available to billions of social network users around the world — earlier this year, saying it hoped to launch next year.

“Depending on Libra’s level of acceptance and on the referencing of the euro in its reserve basket, it 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,” Mersch added.

Like regular currencies, Libra would be highly centralized, an “extremely concerning” setup since it is not backed by a lender of last resort and it is ultimately accountable to shareholders, who are not seen as repositories of public trust, Mersch added.

https://www.reuters.com/article/us-ecb-policy-libra/europe-should-ignore-treacherous-promises-of-facebooks-libra-currency-ecbs-mersch-idUSKCN1VN0H0

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