Facebook is about to undergo further scrutiny of its Libra cryptocurrency, and it may have to answer some difficult questions. Officials said that Libra representatives are meeting with officials from 26 central banks (including the Bank of England and the US Federal Reserve) in Basel, Switzerland on September 16th. The European Central Bank’s Benoît Coeuré is expected to chair the gathering, which will question Facebook over the digital money’s “scope and design.”
In response, Libra reiterated its earlier stance that it “welcome[s] this engagement” with politicians and regulators, and that it “deliberately” set out a long launch schedule to discuss issues and modify its plans based on feedback.
The conversation might not go the way Facebook and the Libra team hope. Coeuré in particular has warned that Libra has to clear a “very high” bar, and EU finance ministers in particular have worried that cryptocurrencies like Libra could destabilize finance and undercut the authority of government banks. France and Germany have both argued that Libra should be blocked in the EU as it would challenge the “monetary sovereignty” of governments.
Facebook has pitched Libra as a way to democratize money, providing banking to many first-timers and creating a format that’s independent of any one country. However, it’s that last part that has officials and critics worried. While Libra is a “stablecoin” that should be pegged to the value of conventional currency, it could give Facebook and the Libra Association a tremendous amount of clout if it takes off. It may not have much choice but to make concessions if it wants the currency to be widely available, and even that isn’t guaranteed.