G7 draft: Facebook’s Libra must not start until properly regulated

Libra

Financial leaders of this world’s seven largest economies will state on Tuesday that they oppose the launch of Facebook’s Libra stablecoin before it’s properly regulated, a draft G7 statement revealed.

The draft, prepared for a meeting of finance ministers and central bankers of the US, Canada, Japan, Germany, France, Italy and the UK, said digital payments may enhance access to financial services, cut inefficiencies and costs.

However, such payment services needed to be appropriately supervised and regulated so they wouldn’t undermine fiscal stability, consumer protection, privacy, taxation or cybersecurity, the draft statement, seen by journalists at our partner news agency Reuters, said.

Without proper oversight, such stablecoins might be used for money laundering, terrorist and proliferation financing, could compromise market integrity, governance, and undermine legal certainty,” it said.

“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.

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Stablecoins are tied to a conventional money or basket of assets, and employed for payments or preserving value.

The G20’s Financial Stability Board (FSB) set out 10 recommendations in April for a common, global approach to regulating stablecoins, motivated by social networking giant Facebook indicating its Libra stablecoin.

The G7 draft notes a number of G7 authorities are investigating the opportunities and risks associated with central bank electronic monies (CBDC’s).

The European Central Bank reported this month it ought to prepare to issue a digital euro to complement banknotes and its head Christine Lagarde said on Monday the bank was “very seriously” looking at the creation of a digital euro.

The Bank of England has also launched consultations on a digital pound sterling, but the Bank of Japan and the Federal Reserve have so far taken a back seat.

The G7 draft also expresses concern about the increasing threat of ransomware attacks, which are on the rise as the COVID-19 pandemic shifted economic action on line.

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We affirm our resolve to combat this threat collectively as well as individually, the draft said.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Jan Strupczewski. Editing by Toby Chopra and Alexander Smith.

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