ECONOMY

German government warns against Facebook digital currency

The German government and central bank will look into how to prevent the Libra digital currency from becoming an alternative to national currencies such as the euro, the Bild newspaper reported.

The German newspaper article quoted an internal Finance Ministry document expressing concern about the digital currency planned by US social media giant Facebook.

The ministry declined to comment on the Bild report on Tuesday, but government sources said that the cryptocurrency is clearly a challenge, not least for central banks, and that the euro should remain the only means of payment in the eurozone.

Facebook founder Mark Zuckerberg had in June announced the roll-out of the digital currency, which is due to be available for purchase from 2020 with stable currencies such as the dollar or the euro.

The virtual currency could then be used for online purchases or by people who have to transfer money across borders and currently pay high fees to do so.

Data protection activists are sceptical of the project, while US Treasury Secretary Steven Mnuchin has warned that digital currencies can represent a "national security risk."

US Federal Reserve chairman Jerome Powell, French Finance Minister Bruno Le Maire and Bank of England governor Mark Carney have also spoken out against Libra.

G7 finance ministers are due to discuss the digital currency when they meet near Paris on Wednesday.

Facebook has said that it would launch Libra only once it receives regulatory approval and that any concerns must be completely addressed beforehand.

Contact Us