Group of Seven countries in the world (G7) are not happy with the forthcoming launch of the Libra cryptocurrency, as they feel that such stablecoins should not be allowed to come into the market unless they can address the profound international risks that they hold.
At the IMF and World Bank fall meetings held in Washington, the G7 working group submitted a report to the finance ministers that outline how the facebook created product could threaten the world’s monetary system and financial stability. The report said further that “The emerging technology, which is now mostly unregulated, like other cryptocurrencies, could also hinder cross-border efforts to fight money laundering and terror financing, and throw up problems for cybersecurity, taxation, and privacy.”
Benoit Coeure, board member of the European Central Bank while chairing the task force said, “The G7 believes that no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are addressed.” To this, the Libra Association has assured that Libra was created with the intent “to respect national sovereignty over monetary policy, as well as rules against money laundering and other efforts to stop illicit finances.”
In June, Facebook (FB.O) unveiled Libra, a form of stablecoin backed by currencies from the dollar to the euro and government debt, in one of the most high-profile attempts to draw cryptocurrencies into the banking and corporate establishment their creators sought to subvert.
But unfortunately, the product drew immediate and sustained criticism over concerns on its potential to destabilize the global financial system and erode nations’ control of monetary policy. Others said it could undermine users’ privacy.
Stablecoins, like Libra, has never attracted any attention from global policymakers, partly because of their tiny size. But now, the issue is different. Facebook says Libra is designed to address inefficiencies in the global payments system, which is beset by high fees, lengthy transfer times and a lack of reliability. This is something that can snowball into financial digital crises later, which is what G7 feels the Central Banks, finance ministries and other authorities need to tackle these evident loopholes.
To read more related articles: Click here