Member of European Parliament: Facebook, with more than 2 billion users, could become a “shadow bank” and that regulators should be on high alert

Facebook wants its new cryptocurrency to rival the Dollar.

Facebook Inc.’s ambitious plan to roll out its own cryptocurrency ran into immediate political opposition in Europe, with calls for tighter regulation of the social-media giant, according to Bloomberg.

French Finance Minister Bruno Le Maire said the digital currency known as Libra shouldn’t be seen as a replacement for traditional currencies.

“It is out of question’’ that Libra “become a sovereign currency,’’ Le Maire said in an interview on Europe 1 radio. “It can’t and it must not happen.”

Le Maire called on the Group of Seven central bank governors, guardians of the global monetary system, to prepare a report on Facebook’s project for their July meeting. His concerns include privacy, money laundering and terrorism finance.

Libra was also a talking point at the European Central Bank’s annual symposium in Sintra, Portugal, where Bank of England Governor Mark Carney referenced Libra. „Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation,” he said.

While Carney said „we need to have an open mind” about technology that can facilitate cross-border money transfers, „we will look at it very closely and in a coordinated fashion” at multilateral organizations including the G-7, the International Monetary Fund, Bank for International Settlements and Financial Stability Board.

Carney added that Libra would have to face regulation. “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulations,” the central banker said.

Meanwhile, Markus Ferber, a German member of the European Parliament, said Facebook, with more than 2 billion users, could become a “shadow bank” and that regulators should be on high alert.

Facebook is developing Libra, a stablecoin designed to avoid the volatility of Bitcoin and thus be useful for commerce, in partnership with some of the biggest names in payments and technology, such as Visa Inc. and Uber Technologies Inc. The new currency, which will launch as soon as next year, is pegged to a basket of government-backed currencies and securities.

While Bitcoin, the original cryptocurrency, has attracted a lot of attention since its creation a decade ago, it’s still not widely used beyond market speculation. Facebook meanwhile, plans to build a new digital wallet that will exist in its Messenger and WhatsApp services to make it easy for people to send money to friends, family and businesses through the apps.

„This money will allow this company to assemble even more data, which only increases our determination to regulate the internet giants,” Le Maire said in parliament.‘Intense pressure from regulators’

Many experts see Facebook’s foray into crypto as a promising sign for the industry, but say regulatory hurdles could be an area where the venture could potentially stumble.

“The news comes at a time when Facebook is under intense pressure from regulators, shareholders, and users to address privacy shortcomings,” said Aurelie L’Hostis, senior analyst at Forrester.

Facebook working with financial firms like Visa and Mastercard means “we can expect regulators and governments to raise questions regarding Facebook’s financial data collection and management process, and whether that system meets all legal and regulatory requirements,” L’Hostis says in a note Tuesday.

Raymond James says it sees potential in Facebook’s digital wallet, Calibra, saying it could help deliver on the company’s aim to provide “basic financial services to those without access.”

While it faces questions over whether it can lure in enough customers from traditional financial services and generate a profit, analysts at the investment bank say the focus on financial inclusion could “increase e-commerce adoption and thus benefit FB.”

TransferWise, a London-based fintech firm focused on money transfers and cross-border payments, welcomed Facebook’s entrance into the market. The company’s CTO Harsh Sinha said “large companies with large resources” can help facilitate conversations with regulators.

“The reality is that there is quite a bit of regulatory work that goes into putting up a global network of payments but maybe there’s a way to bypass that,” he told CNBC.