September 2, 2019 / 7:00 AM / 20 days ago

Facebook's Libra could undercut ECB's powers: Mersch

FILE PHOTO: Representations of virtual currency are displayed in front of the Libra logo in this illustration picture, June 21, 2019. REUTERS/Dado Ruvic/File Photo

FRANKFURT (Reuters) - Widespread acceptance of Facebook’s proposed Libra currency could even undermine the European Central Bank’s ability to set monetary policy, a potential risk for the currency bloc, ECB board member Yves Mersch said on Monday.

“Depending on Libra’s level of acceptance and on the referencing of the euro in its reserve basket, it could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role, for instance by reducing demand for it,” Mersch added.

Reporting by Balazs Koranyi; Editing by Peter Graff

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