September 3, 2019

Andrew Campbell 

On June 18 Facebook ambitiously announced for forming a new subsidiary Calibra to provide financial services in a digital wallet, namely the Calibra wallet app, for a new digital currency Libra, which is scheduled to launch in the first half of 2020. The issue of cryptocurrencies has been spreading concerns all over the world.

Yves Mersch is a prominent jurist and lawyer who served as Governor of the Central Bank of Luxembourg from 1998 to 2012 and as a Member of the Executive Board of the European Central Bank (ECB) since 2012. On February 8, 2018, Mersch had shared his viewpoints on the risks of cryptocurrencies entitled “Virtual or virtueless? The evolution of money in the digital age”, which he lectured at the Official Monetary and Financial Institutions Forum.

Moreover, Mersch delivered a keynote speech on September 2 at the ECB Legal Conference 2019 featuring "Building bridges – central banking law in an interconnected world" in Frankfurt, Germany. Later his speech was published on ECB website, titled “Money and private currencies: reflections on Libra” to raise public awareness of cryptocurrencies. 

In this latest speech, Mersch stated that Libra is no different from other private currencies which cannot protect its holders’ interests as central banks do with public money with their full faith and credit. Mersch also listed that there are legal and regulatory challenges to Libra including the obligation of the Markets in Financial Instruments Directive and the Fourth Anti-Money Laundering Directive, jurisdiction asserted by the regulatory or legislative authorities such as the EU, cross-border cooperation and coordination supervised to regulate in the stability of the global monetary and financial system. Accordingly, the Libra Association Council lacks a sovereign entity and has no central issuance authority.

Photo:Webshot.