G7 Opposes Launch of Facebook’s Stablecoin Libra Until Proper Regulation
The top seven economies of the world aka the G7 countries have recently voiced their opposition for letting Facebook launch its Libra stablecoin under proper regulations are in place.
As per the draft received by Reuters, the meeting between central bankers of the G7 countries concluded that private stablecoins can undermine the global financial stability, privacy, consumers protections, and other things.
Although the G7 countries acknowledged that digital payments can improve financial services while cutting costs, they stated that there’s a lot to be done on the regulatory front before allowing them to function in the market.
“The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards,” the draft said.
The G7 countries added that without proper supervision, stablecoins can be a potential tools for money laundering and terror financing. The draft further mentions that all the G7 authorities are exploring new opportunities and risks associated with central bank digital currencies (CBDCs).
As major payment activity shifts online during the COVID-19 pandemic, the G7 also shows concerns for the threats of rising ransomware attacks. The draft notes: “These attacks, which often involve payments in crypto-assets, jeopardize essential functions along with our collective security and prosperity. We affirm our resolve to combat this threat collectively as well as individually”.
Global financial institutions have also accelerated their work to establish a regulatory framework for the smooth functioning of central bank digital currencies (CBDCs).The International Monetary Fund (IMF), the World Bank and the Bank for International Settlements (BIS) are working on formalizing the use of CBDCs in the banking systems.
The newly released report mentions that by 2022, all three institutions will have completed the regulatory stablecoin framework. The reports also puts special emphasis on “global stablecoins” or GSCs.
The report states: “The FSB has agreed on 10 high-level recommendations that promote coordinated and effective regulation, supervision and oversight of GSC arrangements to address the financial stability risks posed by GSCs, both at the domestic and international level. They support responsible innovation and provide sufficient flexibility for jurisdictions to implement domestic approaches”.
It seems that stablecoins will play a fundamental role in global digital payments.