The European Central Bank’s legal official Yves Mersch has described Facebook’s Libra project as “beguiling but treacherous”, according to Bloomberg.
Mersch made his comments during a speech at the European Central Bank’s legal conference held in Frankfurt on Monday.
He argued that private currencies have little chance of establishing themselves as viable alternative currencies to ones issued by banks.
“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favour of the beguiling but treacherous promises of Facebook’s siren call,” said Mersch.
The comments made by Mersch mark yet another wave of criticism to hit the Libra project.
French central bank governor Francois Villeroy de Galhau has previously raised questions about how Libra intends to handle money laundering and data protection.
Bank of England governor Mark Carney has also been vocal about how the US dollar’s influence could be reduced by digital currencies.
“The dollar’s influence on global financial conditions could similarly decline if a financial architecture developed around the new [digital currency] and it displaced the dollar’s dominance in credit markets,” says Carney.
“By reducing the influence of the US on the global financial cycle, this would help reduce volatility of capital flows to emerging market economies.”
While he believes the likes of Libra will not be able to claw the dollar’s influence away just yet, Carney claims that new technologies could pave the way for a global digital currency to challenge the US currency in the near future.
If Carney’s speculation is correct, it would be interesting to see how Yves Mersch and others who have the same mindset react to the possibility of a digital currency becoming a viable alternative to national legal tender in its own right.
Interested in reading more Libra-related stories? Discover more about Mark Carney’s views on how the US dollar could be replaced by a global digital alternative.