A board member of the European Central Bank (ECB) has argued that stablecoins like Facebook’s long-awaited Libra coin pose risks to public policy priorities.
September 17, 2019, | AtoZ Markets – Facebook’s Libra Coin is now worrying European Central Board members for mass adaption and a threat to central banks. The stable coin like Libra, which has a huge potential for instant mass adaption has to pass a tough regulatory test from regulators.
On Monday, ECB board member Benoit Coeure believes that stablecoin such as Facebook’s Libra coin posed risks to public policy priorities.
ECB sees Stablecoins as a threat to Public policy
Benoit Coeure told central bank members from all over the world that stablecoins were largely untested and promised a tougher regulatory approach. His opinion shows major concerns especially for Facebook’s planned Libra coin, as it is well known upcoming stablecoin and might disrupt the traditional way of money transfer.
ECB member Bonoit Coeure stated that: “Stablecoins are largely untested, especially on the scale required to run a global payment system. They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”
Facebook’s Libra is the most well-known of the stablecoins. It is backed by assets such as traditional money deposits, short-term government securities or gold.
Libra coin already has plans to expand into ecommerce which might be a high-profile attempt to draw cryptocurrencies into the banking and corporate environment.
On the other hand, regulatory bodies from around the world also have highlighted Libra coin and posed negative opinions saying that the coin has a destabilizing effect on the global financial system and potential for use in money laundering and fraud activities.
Moreover, last week, France and Germany’s finance ministers also showed concerns at a meeting of euro-zone finance ministers that Libra and other cryptocurrencies posed risks to consumers, financial stability and even monetary sovereignty.
Libra spokesperson positive views on stablecoin
At the BIS event in Switzerland, the Geneva-based Libra Association and Calibra, a Facebook unit that will provide digital wallets for Libra users gave a presentation in that event.
At an event, Libra’s spokesperson said: “We recognize that blockchain is an emerging technology and that policymakers must carefully consider how its applications fit into their financial system policies.”
After Coeure’s remarks on Libra coin, David Marcus who is Facebook’s top executive claims that Libra was not a threat to the power of states to control monetary policy. And, it was designed to be a payment network running on top of existing currencies.
AtoZMarkets’ Interview with Founder of StabConf and BlobFlow
AtoZ: The ECB official, Benoit Coeure, has mentioned that Facebook’s upcoming Libra coin pose risk to public policy priorities. Do agree or disagree with his statement, and why? What do you think about the future of Stablecoin?
Ivan: Benoit Coeure’s worldview seems to be shortsighted. Stablecoins stand to empower decentralized mediums of exchange and enable faster adoption of blockchain technologies. This would drive economic growth around the world, including Europe, which is positioned exceptionally well to benefit from that growth.
AtoZ: Will Facebook’s Libra coin have the potential for mass adaption?
Ivan: It remains to be seen whether Libra coin would be widely adopted. I would personally never bet against Mark Zuckerberg as he has proven to be incredibly industrious and effective in the past. There are architectural questions that remain to be answered about Libra’s decentralization, which raises red flags for a large portion of the blockchain community, but it’s an interesting experience nonetheless. It would be great if regulatory leaders were less prejudiced.
AtoZ: Do you think Stablecoin can ease global payments? If Yes, Why?
Ivan: Stablecoins benefit from many advantages of cryptocurrencies, such as decentralization, transparency and seamless transfer, while reducing or eliminating volatility. This combination is a very elegant and powerful solution for global payments.
Do you think stablecoin like Facebook’s Libra pose risks to central banks? Let us know in the comment section below.