Facebook’s Libra has been labelled a threat to global financial stability by the G7 group of nations.
According to Reuters reports on Thursday, a task force set up by the G7 to look into the issues said that rules of the highest standards are needed to minimize the use of digital currencies in money laundering and funding terrorism.
Following a meeting of finance chiefs from the G7 In Chantilly, France, this week, following the meeting of finance chiefs held by the G7, the group also mentioned about tax issues and digital money as they would address the matter.
Although some benefits of Facebook Libra were also observed but high on the agenda of their meeting borders on the facebook crypto’s perceived risks to the monetary control of regulators.
European Central Bank (ECB) board member and head of the G7 task force, Benoit Coeure, told the G7 that:
“Despite the fact that a global stablecoin for retail purposes could provide for faster and cheaper remittances, spur competition for payments and thus lower costs, and support greater financial inclusion but yet such cryptocurrencies poses serious risk to policy priorities such as anti- money laundering, consumer and data protection, terrorism financing, competion and compliance with tax rules .”
Francois Villeroy de Galhau, Bank of France governor and and member of the governing council of the ECB, added that, “as regulators seek to encourage innovation, at the same time they wouldn’t allow that which comes to the detriment of the security of the consumer.” He also mentioned about gray aspects of Facebook Libra and said that more details were needed regarding it.
Coeure was quoted in a piece from Financial Times as saying that cryptocurrencies like Libra “could also pose issues related to monetary policy transmission, financial stability and the smooth functioning and also public trust in the global payment system.”
“The sovereignty of nations might be weakened or jeopardised by these new currencies.” French finance minister Bruno Le Maire echoed previous concerns over the threat to the dominance of national currencies by a token launched by a tech firm with billions of users.
Before regulatory approval is likely to be granted to developers of stablecoin like Libra, significant work is required, according to the draft document from the G7.
According to Financial Times, the document stated thus:
“It is imperative that authorities be vigilant in assessing risks and implications for the global financial system as large technology or financial firms leverages on vast existing customer bases to rapidly achieve a global footprint,”
In its draft recommendations, the G7 says such stablecoins must meet the highest regulatory standards and come under regulatory oversight and also a good legal basis in jurisdictions where they operate is also necessary in order to guarantee adequate protection for stakeholders and users.
They further said in other to protect market integrity, the group listed the need for operational and cyber resilience and secured, transparent management of assets.
Credit: Daniel PalmerJOIN OUR COMMUNITY