France fears Facebook's digital currency will bring 'considerable disruption'

12 September 2019, 13:30 | Updated: 12 September 2019, 15:06

Facebook has been warned that it will not be allowed to launch its planned digital currency in Europe so long as concerns remain that it could destabilise the global financial market.

The social media giant announced plans for its own cryptocurrency - Libra - earlier this summer, and said it would be used alongside a smartphone-based wallet app called Calibra before the middle of 2020.

French finance minister Bruno Le Maire has said the cryptocurrency will be barred from operating in Europe until worries about sovereignty, financial risks and potential market dominance are quelled.

Speaking at a meeting of the Organisation for Economic Co-operation and Development in Paris, he said consumers and companies alike would be put at risk.

Mr Le Maire added: "This eventual privatisation of money contains risks of abuse of dominant position, risks to sovereignty, and risks for consumers and for companies.

"Libra represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption."

Mr Le Maire did not spell out how France would be able to prevent Libra being rolled out in other European countries, including members of the European Union.

Nations aside from France have already cast doubt on Libra, with Switzerland having said earlier this week that the proposed payment system should face strict rules typically reserved for banks.

Bank of England Governor Mark Carney was among those who suggested Libra would face strict regulation, and the UK data watchdog has also raised privacy fears over how customer details would be protected.

Facebook has attempted to downplay the initial ambition of Libra, saying that at launch it will only allow payments between users via smartphones or other devices.

However, the currency will be open source - meaning it can be included in other and existing digital wallets.

UK Information Commissioner Elizabeth Denham has warned that Libra "must work in tandem with people's privacy expectations and rights", with Facebook having suffered major damage to its reputation since the Cambridge Analytica data scandal emerged last year.

There was global outrage when it emerged the political consultancy firm had harvested the data of millions of Facebook profiles without consent - and used it for political advertising.

Facebook said 87 million users were affected and it was hit with a £500,000 fine in the UK for "serious breaches of data protection law" by failing to safeguard the personal information of its users.