In the latest round of setbacks for Facebook’s planned Libra cryptocurrency, Germany ramped up its rhetoric against the electronic money today and Wells Fargo announced a blockchain plan that may be a competitor.
In Germany, Finance Minister Olaf Scholz Tuesday said Berlin would reject any emergence of what he called “a parallel currency.”
Scholz’s remarks, delivered at a panel discussion in Berlin and reported by Reuters, followed a Sept. 13 announcement that France and Germany will block Libra. The two governments stated “no private entity can claim monetary power, which is inherent to the sovereignty of nations.”
Both countries also supported an initiative by the European Central Bank to create a public cryptocurrency.
Also today, Wells Fargo announced the development of its own “stablecoin” — a less volatile cryptocurrency backed by traditional assets such as a fiat currency or commodity — joining banks like JP Morgan in exploring a product that would compete directly with Libra.
- On Monday, Libra creator David Marcus took to Twitter to defend Facebook’s planned stablecoin. In an eight-post thread, Marcus argued that Libra can’t pose a sovereign threat to nations as it will not create any “new money.”
- “Libra will be backed 1:1 by a basket of strong currencies,” Marcus tweeted. “This means that for any unit of Libra to exist, there must be the equivalent value in its reserve… We will continue to engage with Central Banks, Regulators, and lawmakers to ensure we address their concerns through Libra’s design and operations.”
- Libra representatives were grilled Monday in Basel by officials from 26 central banks, including the Federal Reserve and the Bank of England. The chair of the meeting, Benoît Coeuré of the European Central Bank, told the Financial Times prior to the summit that the bar for approval would be “very high.”
- Still, Libra forges on, announcing Monday that it will launch in the second half of 2020, as originally planned.
Karma Takeaway: Facebook’s Libra faces an increasingly challenging environment, with France and Germany planning to block it completely and U.S. banks like Wells Fargo and JPMorgan plotting courses for their own asset-backed “stablecoins.”