Facebook's rebranded cryptocurrency Diem is a 'wolf in sheep's clothing,' Germany's finance minister says
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- Facebook's renamed cryptocurrency is a "wolf in sheep's clothing" and does not change the underlying risks that come with it, Germany's finance minister said on Monday.
- "It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed," Olaf Scholz said after a G7 meeting.
- Financial leaders and central bankers have underscored the need to regulate digital currencies.
- Facebook changed Libra's name to Diem to stress a simpler, revamped structure.
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Facebook's Diem, formerly known as Libra, is a "wolf in sheep's clothing" because a new name does nothing to change associated regulatory risks, Germany's finance minister said on Monday.
"A wolf in sheep's clothing is still a wolf," Reuters reported Germany's Olaf Scholz as saying. "It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed."
"We must do everything possible to make sure the currency monopoly remains in the hands of states," he said.
Scholz made the comments after a G7 (Group of Seven) virtual meeting of advanced economies where finance ministers and central bankers discussed the need to regulate digital currencies. US Treasury Secretary Steven Mnuchin hosted the discussion, the 12th G7 gathering he has chaired this year.
Facebook switched Libra's name to Diem, which means "day" in Latin, to help it gain acceptance from regulators who are concerned it could upend financial stability and threaten user privacy. The tech giant is hoping its digital currency will launch by early 2021.
David Marcus, the head of Facebook Financial, or F2, said on Monday he hopes regulators will give the company the "benefit of the doubt," CNBC reported.
Diem would operate as a digital currency, providing an alternative to the US dollar and other currencies managed by foreign governments. It was originally meant to be backed by a wide mix of currencies and government debt. But it's now meant to launch as a single coin backed by the dollar.
Switzerland-based Diem Association, the digital token's governance body, is currently awaiting approval from the Swiss Financial Market Supervisory Authority.