FRANKFURT, Sept. 2 (Xinhua) -- Facebook's newly announced private cryptocurrency 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 on 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 eurozone banks, and undermine the single currency's international role, for instance by reducing demand for it," Mersch was reported by the bank as saying.
Speaking of Libra as the "beguiling but treacherous promises of Facebook's siren call," Mersch said the aim of 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 that a central bank had a dual role; provide the institutional backing necessary to issue reliable forms of money and rigorously preserve 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 policymakers and regulators worldwide.
According to Facebook, Libra would be run by the Libra Association, a non-profit based in Geneva, Switzerland, whose stakeholders would include PayPal, Visa, Mastercard and Uber, among others.
