FRANKFURT, Sept. 2 (Xinhua) -- Facebook's newly announced private currency Libra could reduce the European Central Bank's (ECB) control over the euro and undermine the single currency's international role, Yves Mersch, member of the Executive Board of the ECB said Monday.
"Depending on Libra's level of acceptance and on the referencing of the euro in its reserve basket, it could reduce the ECB's control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency's international role, for instance by reducing demand for it," Mersch said in a speech published by the bank.
Describing Libra as the "beguiling but treacherous promises of Facebook's siren call," Mersch said his speech was to "highlight the perils of entrusting the smooth processing of payments, the savings of citizens and the stability of the global monetary and financial systems to unaccountable private entities with a questionable track record in matters of trust."
Mersch stressed a central bank's dual role both in providing the institutional backing necessary to issue reliable forms of money and in rigorously preserving public trust in them.
Cryptocurrencies and other forms of privately issued instruments can only fulfill some, but not all, of the functions of money, he said.
Facebook announced in June that it plans to launch a "low-volatility cryptocurrency" called Libra next year to tap into digital payments, a move that has raised concerns among financial policy-makers and regulators worldwide.
According to Facebook, Libra would be run by a Geneva, Switzerland-based non-profit, the Libra Association, whose stakeholders include PayPal, Visa and Mastercard, Uber, among others.
