Bruno Le Maire, France’s minister of the economy and finance, is not a fan of Facebook’s planned crypto-ish currency, Libra.
The Organisation for Economic Co-operation and Development is running a conference today and tomorrow in Paris — the OECD Global Blockchain Policy Forum 2019. Le Maire spoke this morning about France’s vision for blockchain.
The last few minutes of his talk had some strong words for Libra:
All these concerns about Libra are serious. I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil.
Bruno Le Maire versus Libra
Le Maire has long been concerned about Libra. In June 2019, he said that Libra couldn’t be allowed to become a sovereign currency, he warned French Parliament that Facebook would use Libra to gather even more data, and he started pushing the G7 central bankers into taking action on Libra.
Here’s Le Maire’s talk today, in French. The Libra bit starts at -6:09. Grégory Raymond in France also tweeted a rough transcript.
Le Maire’s opinions haven’t changed since June:
Libra also represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption.
… This eventual privatisation of money contains risks of abuse of dominant position, risks to sovereignty, and risks for consumers and for companies.
Libra responded, though only Decrypt ran very much of their reply:
In the nearly three months since the intent to launch the Libra project was announced, we have become the world’s most scrutinized fintech effort. We welcome this scrutiny and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.
The comments today from France’s economy and finance minister further underscore the importance of our ongoing work with regulatory bodies and leadership around the world. The Libra Association and its members are committed to working with regulatory authorities to achieve a safe, transparent, and consumer-focused implementation of the Libra project.
We recognize that blockchain is an emerging technology, and that policymakers must carefully consider how its applications fit into their financial system policies.
That last bit spectacularly misses the point. Le Maire doesn’t care about your technology — he cares about what you’ll be doing with it.
Grégory Raymond discovered that Libra has not, in fact, been “working with regulatory authorities”:
According to my information, the French authorities have not received an application for accreditation from Libra (needed to operate in the EU). To their knowledge, it’s the same elsewhere in the EU: “In the face of the risks identified, Facebook has so far provided no response to public authorities.”
Being registered in Switzerland isn’t enough — Switzerland works closely with the EU, but is a “third country” for this purpose.
Brexit, but it’s a crypto
Le Maire was saying all of this in June. Did Facebook think they could just ignore him? How did Facebook not see this coming, when Le Maire said directly that it was coming?
Facebook is doing a great job at spurring regulatory clarity in the industry — alas, in the direction of “ban this and jail everyone involved.”
Facebook proposed a system that was clearly meant to be big. They’re big enough to affect the world, and they set out big plans.
Did Libra hire an economist? Someone who’d worked at a central bank, or for a government, on serious macroeconomics — someone who could talk to regulators in their own language — at any point since Facebook started looking into cryptocurrencies in 2017?
Well, no — in June 2019, David Marcus told The Information how “We need someone who knows how economies tend to work, who understands how to operate in a very complex, decentralized governance type of environment.”
You might think “someone who knows how economies tend to work” would have been a useful sort of person to have on the team before the big announcement.
Did Libra really spend two years working on a philosophy and a white paper, but not speak to any of the financial regulators who could block their financial product?
Libra looks very like nobody has done a single bit of the homework that any sane person would have expected. Like Brexit, but it’s a cryptocurrency.
Twelve-dimensional The Dog Ate My Homework
Everything Libra’s put forward looks ridiculously amateurish and ill-considered.
Nobody can figure Libra out because they keep assuming anything about this is smart — that Facebook must be smart, they must have a thought-through plan, they didn’t really spend two years not talking at all to a regulator, and what looks like hopeless floundering is really twelve-dimensional chess, and all of this is good news for Libra.
But I think it’s time to consider the alternate hypothesis — that Libra is a multilayered fractal lasagna of dumb as hell.
Then we’re faced with the question: “how the hell did they let this get this dumb?”
Libra is an insular project by people who don’t seem to understand that the world outside Silicon Valley is not like the view out of their corner office window.
Look at Libra’s fabulous planned payment system of the future — which is pretty much the payment system of the present here in the UK. Or something a bit backward from the present.
Libra looks very like the work of Bitcoin people locked in a room with too many resources and an unlimited supply of tech-bro supremacist arrogance. This is how a smart person becomes a stupid person, but ten times faster.
The white paper is inchoate and self-contradictory — it’s a pile of Bitcoin dreams and wishes, with random things they think it would be cool to have a cryptocurrency do, if it was run by sensible people, i.e., them.
It’s the same disconnected economic fantasyland that ICO white papers promote — but it’s a bit different when it’s a company the size of Facebook saying these things, in all apparent seriousness.
When you take dumb ideas, but you put some serious real-world power behind them … they’re still dumb ideas.
— Shen Comix (@shenanigansen) September 9, 2019
Your subscriptions keep this site going. Sign up today!
cheers to Colin Platt for cribs
Bruno Le Maire is a product of the very best schools in France, with the most rigorous education in politics and economics that it is possible to have, anywhere, at any time in human history; and he has spent a lifetime applying it with sufficient skill to have the very top job in finance and fiscal policy in France.
It is therefore no surprise at all to hear that he had made cogent and cutting observations on the economic and political foundations of Libra.
He’s stated his objections and, being a product of both ENA and Science-Po, he is expecting a well-thought-out and rigorously factual reply; and, if none is forthcoming, he will become dismissive – ever so politely – of those he will have every reason to regard as fools.
That’s how they work, the Énarques who are the intellectual aristocracy of France: but, equally, Libra’s economists and bankers and public policy experts can still engage with him – although they really needed to have started that a year ago – with some hope of changing his views.
And they need to get to work, because his views will rapidly become the consensus view of all his fellow finance ministers in the EU and the OECD, and their central bankers, and their prime ministers and presidents: that’s what graduates of Science-Po and ENA are trained to do.
But if, as you say, Libra don’t have anyone like that on board, and see no reason why they should, the points Le Maire has raised are answered by a very telling silence.
Or by laughably illiterate burbling from economic idiots.
That, too, is an informative and useful answer, and it is being put to use by a very well-educated and effective politician and international negotiator who is the finance minister of a G7 economy.
Facebook could have hired – or simply asked! – any number of of economists, central bank presidents, chancellors and finance ministers to advise the project, and consult with their peers on how the new currency can be brought into use.
But they didn’t, and I am inclined to follow your view, that the whole project is built on dangerous stupidity.
To be fair, the rest of Le Maire’s talk was blockchain bafflegab, of no evidential basis …