CHANTILLY, France (Reuters) – France said on Wednesday the conditions were not ripe for Facebook to go ahead with plans for its Libra digital coin, as G7 finance ministers gathered north of Paris on Wednesday for a meeting focused on reining in the powers of big tech giants.
FILE PHOTO: Representations of virtual currency are displayed in front of the Libra logo in this illustration picture, June 21, 2019. REUTERS/Dado Ruvic/Illustration/File Photo
Facebook’s recent announcement of plans to launch a digital coin has met with a chorus from regulators, central bankers and governments insisting it must respect anti-money-laundering rules and ensure the security of transactions and user data.
But there are also deeper concerns that the growing powers of big tech companies increasingly encroach on areas belonging to governments, like issuing currency.
“We cannot accept to have any exchange currencies with the same kind of power and the same kind of role of sovereign currencies,” French Finance Minister Bruno Le Maire told journalists.
“There is a need for regulation, there is need for very strong commitments and obligations for that project and for the time being the necessary requirements are not fulfilled by the project Libra,” he added.
France, which chairs the Group of Seven advanced economies this year, has asked European Central Bank executive board member Benoit Coeure to set up a G7 task-force to look into crypto-currencies and digital coins like the Libra.
Coeure is due to present a preliminary report to ministers and central bankers at the meeting, in the quaint chateau town of Chantilly, north of Paris.
Bank of Japan Governor Haruhiko Kuroda said the task force was likely to evolve over time into something including a broader range of regulators beyond G7 countries, given the huge impact Libra could have on the global economy.
“If the Libra is aspiring to be used globally, countries must seek a globally coordinated response,” Kuroda said. “This is not something that can be discussed among G7 central banks alone.”
G7 finance ministers are also concerned about how best to tax big tech companies, with France keen to use its presidency of the two-day meeting to get broad support for ensuring minimum corporate taxation.
G7 governments are concerned that decades-old international tax rules have been pushed to the limit by the emergence of companies like Facebook and Apple, which book profits in low-tax countries regardless of the source of the underlying income.
The issue has become more vexed than ever in recent days as Paris defied U.S. President Donald Trump last week by passing a tax on big digital firms’ revenues in France, despite a threat from Trump to launch a probe that could lead to trade tariffs.
Their bilateral dispute aside, France and the United States are in favor of rules ensuring minimum taxation as part of an effort among nearly 130 countries to overhaul international tax rules.
Although a G7 agreement would set the tone for the broader push, an agreement among all of the G7 ministers on a minimum rate or range of rates is likely to prove elusive as Britain and Canada have reservations, a French Finance Ministry source said on Friday.
“If we don’t agree at the G7 level on the broad principles for taxing digital companies today or tomorrow then quite frankly it will be complicated to find among 129 countries at the OECD,” Le Maire said.
Additional reporting by Myriam Rivet; Editing by Dan Grebler and Peter Graff