France, Germany against Facebook's Libra, in favour of public cryptocurrency

The criticism came as the European Central Bank announced it was working on a long-term plan to launch a public digital currency that could make projects such as Libra redundant, according to Reuters.

Virtual currencies could pose risks to consumers, financial stability and even ‘the monetary sovereignty’ of European states. The 19-country euro zone bloc is united in pursuing a tough regulatory approach should Libra seek authorisations to operate in Europe, officials said at the meeting. It is also considering a common set of rules for virtual currencies, which are currently largely unregulated.

Nevertheless, Libra was ‘a wake-up call’, as it had revived efforts to widen the uptake of an ECB-backed project for real-time payments in the euro zone, known as TIPS. The project, launched in 2018, has been met with caution by banks. An ECB official said the project could allow consumers to use electronic cash, which would be directly deposited at the ECB, without need for bank accounts, financial intermediaries or clearing counterparties.

One of the purposes of this initiative was to make sure that banks reduce fees on international payments.

While euro zone ministers seem united on a tough regulatory line on Libra, it is less clear whether they agree to set up common rules for virtual currencies. New EU-wide rules came into force in 2018 to increase checks on virtual currencies’ trading venues with the purpose of reducing risks of money laundering and other financial crime.

In the absence of specific regulations, EU officials are assessing whether existing rules governing financial instruments could apply, but have so far reached no conclusion.