The unveiling of Facebook’s Libra cryptocurrency and eventual launch of the token could take business away from traditional banks.
This warning came from a German Bundesbank chief.
“They would almost certainly become systemic by nature, not only because of their operational risks, but also in a more fundamental way: they could undermine the deposit-taking of banks and their business models,” Jens Weidmann was quoted at a conference at the Bundesbank.
“This might disrupt transaction banking and financial market intermediation,” Weidmann, who also sits on the European Central Bank’s Governing Council, said.
Earlier this week, Facebook announced that its cryptocurrency project called Libra alongside its digital wallet will allow anyone to send and receive money from any part of the world when it is launched in by the second half of 2020.
Facebook has faced several criticisms and concerns over its chequered history of data leaks and invasion of privacy scandals.