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[Exclusive] UN officials: The EU is very negative towards Libra. Both parties dislike Zuckreberg

Abstract : An unnamed French official who was employed by United Nations (UN) revealed that the EU is currently very negative towards Libra.

Chaindder
Chaindder

Jul 03

On July 2, according to the exclusive news obtained by ChainDD in New York, an unnamed French official who was employed by United Nations (UN) revealed that the EU is currently very negative towards Libra. Some countries in the EU are considering that it is necessary to set up regulatory barriers to Facebook Libra in their territories. A similar approach is likely to be implemented in the United States because neither the Democratic Party nor the Republican Party like Zuckerberg and Facebook for a variety of reasons.

According to the plan in Libra’s white paper, Facebook will distribute the digital currency “Libra” in 2020. The IT giant, with 2.7 billion potential customers and huge personal information reserves, will enter the cryptocurrency industry, which may bring innovation to the current financial situation. On the other hand, it may also pose a potential danger to the current financial system and data protection.

Digital currency has become the main battlefield for IT giants to compete with government departments. Libra's competitiveness is reflected in the Facebook‘s huge potential customer base. As long as it is not subject to national policy restrictions, Libra will be widely spread around the world at an extremely fast pace. Libra is based on the US dollar and can be used in a variety of settlements. There is a view that in some countries, Libra may have a higher degree of credit than fiat. Therefore, the uncertainty of policy regulation will be Libra's biggest problem. Here, Chaindd will list the attitudes and measures of Libra by different countries before and after the G20 summit.

In the post-G20 period, the supervision trend in major countries around the world are going to be same.

Before Osaka G20 Summit, The Financial Stability Board (FSB) Chairman Randal K. Quarles sent a letter to the G20 leaders ahead of the summit. “A wider use of new types of crypto-assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation.” he wrote. 

As the gatekeeper of financial system, The Financial Stability Board (FSB) was established in April 2009 after the Lehman financial crisis. For FSB, Libra has been under its supervision and categorized as a “new digital currency that is widely available for small transactions”.

However, on the other hand, Libra may become a multinational money laundering tool. Considering this hidden danger, France, the president country of the seven major participating countries (G7), has decided to set up a special department to prevent various potential problems occurring in the process of the popularization of Libra. Member countries will also explore optimal control measures.

How to deal with money laundering behavior is an international financial issue that is paid much attention by the financial departments of governments of different countries. Countries that are relatively lax in the management of capital transactions may become the bases for money laundering.

In fact, what government agencies need to be vigilant is not only money laundering. Libra has 2.7 billion potential customers based on FaceBook. Kearney, president of the Bank of England, said, "This alone is enough to be regarded as a hidden danger in the financial system." Once Libra loses its credit, it will be heavily sold, which will put a huge burden on the financial system.

As previously analyzed by Chaindd, data is a key factor. The development of large IT companies which originally had a large customer base and the financial community is mutually reinforcing. Large IT companies have sufficient data to analyze and evaluate customers' credits, so as to provide the most suitable services for the customers, and to prevent waste of resources and save costs through customization. These data are also available to economies and SMEs in countries that are new to the digital currency sector and that have not yet formed a comprehensive financial services system.

Ravi Menon, director of the Authority of Monetary Singapore (MAS), commented on Libra that, “it may become a low-cost transfer channel for those who do not have a bank account in Asian countries.” However, while agreeing with the convenience of “inclusive finance”, he also believes that the necessary control measures should be taken because convenience is also accompanied by risks.

There once occurred an accident of personal information leak in FaceBook, and therefore whether complete data protection can be achieved or not has become the biggest doubt. Considering the large size of the FaceBook user base and data reserves, it is foreseeable that Libra will become a leader after its popularization.

Japan Financial Services Agency: Libra may not be recognized as a digital currency

For Libra, the Japanese Finance Agency showed a tendency to "probably not identify it as a cryptographic asset (digital currency)." The "Financial Decision Algorithm" stipulates that the digital currency should be "a property that is neither legal currency nor property based on legal currency." However, Libra is based on local legal currency such as the US dollar and the euro. From a regulatory perspective, Libra-based transactions are likely to be identified as common types of capital transactions and capital flows.

The typical representation of digital currency, bitcoin, is characterized by strong currency fluctuations, which offer great possibilities for speculative behavior. However, Libra was added to a feature that prevents large fluctuations in currency in the design process. Digital currency has always been characterized by large fluctuations in value, and the financial department, which has always been cautious, has been striving to adopt management measures in response to this.

Saito Sou, a representative lawyer from Sao Law Firm, which focues on the Japanese digital currency business, said that if Libra was not recognized as a digital currency, the use of the subject would be limited. To use Libra for final accounts, the entity must have qualification in the banking industry (the qualification of Financial Services Department is extremely strict) or in the fund transfer industry (single fund transfer amount is less than 1 million yen). At present, Yahoo, LinePay and MeruPay have obtained the fund transfer industry qualifications.

Moreover, the problem is not just how to regulate at the legal level. For the financial offices of various countries, the biggest problem is how to manage and supervise FaceBook itself. Libra's potential customers are extremely large. The wide range of online payment design can not be fully managed by the power of any country in the world. The larger the user base, the more important it is to pay attention to the “confirm by myself” process in the transaction process. The Financial Services Agency of Japan has repeatedly stressed that "in order to prevent loopholes in management, international cooperation should be promoted as soon as possible".

Even if Libra is not recognized as a digital currency, the Financial Services Agency will pay as much attention to it as the current digital currency dealers in Japan. For the current digital currency traders, the Financial Services Department has taken measures such as administrative sanctions to specifically address money laundering and improve the security of personal information.

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