The G7 group, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, has written a report which states that global stablecoins, such as Facebook’s Libra, must not be launched until they can be shown to be safe and secure. The BBC, which managed to get a look at the report, said that Libra wasn’t singled out but it’s almost certain the report was initiated as a response to Facebook’s announcement earlier this year.
According to the BBC, the report outlines nine major risks that digital currencies pose to economies and presumably customers. Finance ministers from the G7 counties will be able to look through these risks this week during an International Monetary Fund (IMF) annual meeting. The guidance in the report was drawn up by senior officials from central banks, the IMF, and the Financial Stability Board which co-ordinates rules for G20 economies.
Discussing the measures needed for the roll out of global stablecoins such as Libra, the report says:
“The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed … Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement.”
While the report does highlight the risks that Facebook needs to address, it does warn that Facebook, still, may not get approval to begin issuing Libra. Some risks that the report highlights include that stablecoins should be legally sound, should protect consumers, and should ensure that they’re not used to launder money nor fund terrorism.
The report comes in the same month that Mastercard, Visa, eBay, Stripe, and PayPal all announced they were pulling their support for the project. They each wished it well but didn’t want to become embroiled as Facebook addresses regulatory challenges.
Source: BBC News