The Swiss government is spooked by concerns on the sustainability of FaceBook's Libra as a global currency. This adds to regulatory concerns raised by global regulatory authorities on the viability of the Libra token.
Despite Libra receiving a warm welcome from the Swiss government after announcing Geneva as their HQ last year, the Swiss authorities have raised concerns on the sustainability of Libra as a global currency.
The Swiss government was delighted with their role in an ambitious international project. In a statement made by Canton’s Economic development chief, Pierre Maudet where he stated that Geneva was excited to work with Libra after news emerged that Libra had chosen them as their HQ.
However Swiss finance Minister, Ueli Maurer in late December, explained why the product launch “has failed” and wouldn’t be getting the go ahead from the regulators in the near future. This is because the national banks that were proposed to back the Libra project have yet to accept the basket of currencies offered.
This turnaround is a very harsh stance taken by the SEC, after raised issues in regards of the sovereignty of the Libra digital currency. This was after Facebook’s reputation was marred by allegations of data misuse.
“As long as the SEC is concerned about Libra, saying it’s based on relatively new and unproven technology and could rival the U.S. dollar, other governments including the Swiss will take a wait and see approach.”
Libra also chose not to include the Swiss franc into the offered currencies pegging the stablecoin. That together with the fact that Libra failed to consult with the Finma regulators when they applied for a banking license,
“If stable coins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.”
There were however concerns that Libra’s vague policies on money laundering that could enable crime. Libra has reiterated in a statement.
“We are committed to a continuous and constructive dialogue, our objective remains to find the best way to launch a fast, secure and compliant international payment system.”
Uncertainty in the Launch date
The regulatory crunch they face has thrown Libra’s launch date to uncertainty as they aren’t even sure if they will launch in 2020 or a particular date if they decide to launch in 2020, said Libra’s chief operating officer Bertram Perez.
The Swiss government later through a memo issued Jan 15th 2020, seemed to have changed the harsh stance they had taken with Libra and stated that they were monitoring the shape Libra would take in the future.
“Switzerland is generally open to projects that reduce the cost of cross-border payment transactions and seek to promote financial inclusion.”