Economy

Facebook challenges the European Central Bank with Libra

Omar Marques / SOPA Images / LightRocket via Getty Images

Well then. Facebook wants to bring the digital currency “Libra” onto the market next year – in a slimmed-down format. Instead of a token, the company now wants to bring out a coin that is one-to-one supported by the dollar. Further digital versions of different currencies are to follow.

The dollar project is due to start in January, reports the Financial Times. All that remains is the approval of the Swiss Financial Market Authority, where the Libra Association is based.

European central banks see Libra as a security risk

Facebook is putting further pressure on European supervisors and central banks. Central banks in particular are working flat out on a digital euro, so as not to leave the world of digital payments to private companies or states that are not democracies, NewsABC.net learned from central bank circles. The danger: Neither private companies like Facebook nor authoritarian regimes like China, which is likely to launch the e-yuan in the coming year, know what they are doing with the data of e-currency users.

A serious security risk, senior central bankers sum up to NewsABC.net. For this reason, the European Central Bank (ECB) wants to test the e-euro in numerous regions in the euro zone from the middle of next year. Ideally, this experimentation and test phase should last six months. If everything goes smoothly, the e-euro could come as early as 2022. A time frame, because ECB employees describe as “very sporty, but not impossible” to NewsABC.net.

E-Euro enormous technical challenge

There is indeed a lot of work to be done until then: the technical infrastructure of the e-euro must be secure and run smoothly. In view of several hundred million users, this is an enormous challenge – experts from the Federal Association for Information Technology, Telecommunications and New Media (Bitkom) have therefore expressed doubts to NewsABC.net as to whether the ambitious schedule of the European Central Banks should be adhered to.

However, if the central bankers really need too long, the scenario they absolutely want to avoid occurs: Facebook will be the “first mover” when Libra enters the market and possibly quickly conquer large shares of the market for itself. The longer the e-euro takes, the greater the effect that citizens get used to the Libra – and the greater the security risk associated with Europeans’ payment data.

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