Shortly after calling for a ban on Facebook’s Libra cryptocurrency, French Finance Minister Bruno Le Maire suggested the European Union should create its own digital currency.
His comments, reported by Reuters, were echoed by Benoît Cœuré, a member of the European Central Bank’s executive board, who said the Libra proposal was “a wake-up call.”
Later on September 13, the German MP responsible for blockchain policy announced that his government intends to ban Libra.
Speaking at a press conference following the September 12 ECB meeting in Helsinki, Cœuré pointed mainly to a back-burnered plan to create a digital real-time payment system, TIPS, in the ECB. The non-blockchain system would focus on transactions within the E.U.
But, he added that “[w]e also need to step up our thinking on a central bank digital currency,” Reuters said. These have generally been discussed as cryptocurrencies.
China is far ahead of the E.U. in this regard, claiming to have a digital cryptocurrency ready to be launched. However, reports that it would go live as soon as November were refuted in a Chinese Communist Party newspaper.
Le Maire, for his part, announced that he has a plan “to make the ‘public digital currency’ work.” He plans to discuss it with other E.U. ministers in October.
Speaking before the meeting, Le Maire said Libra threatened the “monetary sovereignty” of governments, and promised to block it in the E.U.
Following the ECB meeting Cœuré said much the same thing. “Certainly the bar set for regulatory approval will be very high,” the former French Treasury official warned.
The ECB’s TARGET Instant Payment Settlement project would cut out financial intermediaries, allowing low-cost, real-time, around-the-clock payments between two parties’ payment service providers.
TIPS promises a payment time of under 10 seconds, a fixed transaction fee of €0.002, and the ability to scale up to meet high transaction volumes. Designed primarily as a European payment system, TIPS settles payment transfers in euros, but could be expanded to support other currencies.
Launched last November, the TIPS system was aimed at firms like PayPal, Google Pay, and Chinese online retail giant Alibaba’s Alipay, Reuters reported at the time.
German MP announces Libra ban
The German member of parliament responsible for the blockchain policy of the governing coalition said on September 13 it intends to ban stablecoin cryptocurrencies including Facebook’s Libra.
The government has made the decision, “not to allow market-relevant private stablecoins,” backed by a basket of fiat currency, Christian Democratic Union (CDU) MP Thomas Heilmann told Der Speigel, a major German magazine.
The decision was part of a larger blockchain strategy by the CDU and its governing partner, the Christian Social Union (CSU), Der Speigel said. That is scheduled for cabinet approval later in September.
Facebook’s Libra falls into this category, said Heilmann. More “volatile” cryptocurrencies like bitcoin that are primarily traded as an investment will not be affected, he added. It is unclear what this means for other stablecoins like the dominant tether (USDt).
Noting that central banks have done “a great job in countering economic crises and inflation,” Heilmann warned, “[o]nce a digital currency provider dominates the market, it will be quite difficult for competitors.”
The coalition’s strategy also calls for a state-run blockchain, and leaves open the possibility of a central bank-issued cryptocurrency.
Updated 5:31 p.m. on September 13 to add the German government’s announcement of a Libra ban.