Major economies raise red flags over Facebook’s Libra

French Finance Minister Bruno Le Maire said the proposed French tax on tech giants would stand until the G7 reaches an agreement on taxing digital business. (AP)
Updated 19 July 2019

Major economies raise red flags over Facebook’s Libra

  • Facebook has proposed creating Libra as a cryptocurrency that is pegged to existing currencies to make it more stable than the likes of Bitcoin

CHANTILLY: Top finance officials from the Group of Seven rich democracies are warning that cryptocurrencies such as Facebook’s Libra should not come into use before “serious regulatory and systemic concerns” are addressed.

The chairman’s concluding summary from the G7 meeting in Chantilly, France, says the officials agreed that so-called stablecoins — cryptocurrencies pegged to real currencies — will have to meet “the highest standards” of financial regulation to prevent money laundering or threats to the stability of the banking and financial system.

The statement says finance ministers, including French host Bruno Le Maire and US Treasury Secretary Steven Mnuchin, agreed that those concerns must be addressed “before such projects can be implemented.”

Facebook has proposed creating Libra as a cryptocurrency that is pegged to existing currencies to make it more stable than the likes of Bitcoin, so that it can used as a way to pay for things. Governments around the world are rushing to assess how that would affect the economy.

Le Maire said that the G7 officials noted that while stable cryptocurrencies such as Libra could reduce costs for transfers and help provide financial services to underserved communities, they would need to be accountable to governments, not just corporations. Libra could, for example, facilitate money laundering and terrorist financing and influence the value of established currencies.

The views echo criticism from US lawmakers this week, who in hearings in Washington said they cannot trust Facebook with a big project such as Libra after recent data privacy scandals.

The G7 summary says that the countries also expect the outlines of a global agreement on taxing digital business by next January. It said the agreement would allow companies to be taxed in countries where they have no physical presence and provide for an arbitration forum.

The US and France in particular are at odds on the issue after Paris said it would put a 3 percent tax on tech giants like Facebook and Google that are typically based in the US. Mnuchin objected to the plan when meeting with Le Maire.

Le Maire said that the current agreement needed to result in a final decision before France could withdraw its tax, but that the process was moving “in the right direction.”

The G7 finance meeting will set the stage for a summit of the countries’ heads of state and government in August. Beyond the US and France, the G7 includes Germany, Britain, Italy, Japan, Canada and representatives from the EU.


Huawei in early talks with US firms to license 5G platform: executive

Updated 19 October 2019

Huawei in early talks with US firms to license 5G platform: executive

  • Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive
  • Huawei has spent billions to develop its 5G technology since 2009

WASHINGTON: Blacklisted Chinese telecoms equipment giant Huawei is in early-stage talks with some US telecoms companies about licensing its 5G network technology to them, a Huawei executive told Reuters on Friday.
Vincent Pang, senior vice president and board director at the company said some firms had expressed interest in both a long-term deal or a one-off transfer, declining to name or quantify the companies.
“There are some companies talking to us, but it would take a long journey to really finalize everything,” Pang explained on a visit to Washington this week. “They have shown interest,” he added, saying conversations are only a couple of weeks old and not at a detailed level yet.
The US government, fearing Huawei equipment could be used to spy on customers, has led a campaign to convince allies to bar it from their 5G networks. Huawei has repeatedly denied the claim.
Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive.
In May, Huawei, the world’s largest telecoms equipment provider, was placed on a US blacklist over national security concerns, banning it from buying American-made parts without a special license.
Washington also has brought criminal charges against the company, alleging bank fraud, violations of US sanctions against Iran, and theft of trade secrets, which Huawei denies.
Rules that were due out from the Commerce Department earlier this month are expected to effectively ban the company from the US telecoms supply chain.
The idea of a one-off fee in exchange for access to Huawei’s 5G patents, licenses, code and know-how was first floated by CEO and founder Ren Zhengfei in interviews with the New York Times and the Economist last month. But it was not previously clear whether there was any interest from US companies.
In an interview with Reuters last month, a State Department official expressed skepticism of Ren’s offer.
“It’s just not realistic that carriers would take on this equipment and then manage all of the software and hardware themselves,” the person said. “If there are software bugs that are built in to the initial software, there would be no way to necessarily tell that those are there and they could be activated at any point, even if the software code is turned over to the mobile operators,” the official added.
For his part, Pang declined to predict whether any deal might be signed. However, he warned that the research and development investment required by continuously improving the platform after a single-transfer from Huawei would be very costly for the companies.
Huawei has spent billions to develop its 5G technology since 2009.