A top Romanian finance chief has slammed Libra as “very dangerous” and says it will “fracture the monetary system”.
Daniel Daianu, the president of the nation’s Fiscal Council, says banks will be crippled if Facebook’s planned cryptocurrency ever comes to fruition, according to state news agency Agerpres.
He said: “Cryptocurrencies are highly speculative financial assets, and assets such as Libra – whether they rely on a bunch of assets which are considered safe or on coins – are very dangerous because they are part of the logic of those who believe that there is a need for parallel markets, the disappearance of central banks.”
Daianu admits the 2008 financial crisis did erode public trust in banks, and encouraged many to seek alternate banking services.
He added: “The financial crisis ruined the reputation of governments and central banks, and some think we need other currencies, parallel circuits, non-hierarchical structures.
“So the discussion is much deeper. It is not only about the monetary system. It is not by chance that libertarians are so attached to this vision.
“Those who reject central banks would like to return to the world of free-banking. That is why Libra is very dangerous, because it would target billions of users and in fact would almost inevitably fracture the monetary system, and central banks would lose their effectiveness.”
He also noted that central banks are already having difficulties in formulating and implementing their policies.
“For the future, if we put cryptocurrencies aside, which have to be very strictly regulated, I am for a very severe regulation of capital markets, of what is called the shadow banking sector.
“In the future, monetary policy will be a mix of pragmatic inflation targeting and the control of monetary aggregates.”
He is far from the only European fiscal official to air fears about Libra.
Last month, finance ministers in France declared they will “block Facebook’s Libra project” as it poses a threat to monetary sovereignty.
Portugal’s finance minister Mourinho Félix also underlined his country’s aversion to the project in a recent interview, saying: “Portugal shares the concern of other European countries regarding Facebook’s cryptocurrency.”
Moreover, an influential British parliamentary committee wants to “probe” Facebook’s controversial Libra cryptocurrency project amid fears that the social media giant’s move into the financial sector will grant it too much power.
Ministers in Germany have also expressed concerns over how Libra may develop within the EU, given it would take power away from monetary and fiscal policies.