A board member of the European Central Bank (ECB) has again argued that global stablecoins pose broad policy risks. He made this comment at a meeting in Brussels.
26 November 2019 | AtoZMarkets – Benoît Coeuré, a member of the executive board of the ECB, has suggested that the central bank is considering launching a digital currency.
ECB suggests digital currency developments
While speaking at a joint conference of the ECB and the National Bank of Belgium, in Brussels, Coeuré said:
“A central bank digital currency could ensure that citizens remain able to use central bank money even if cash is eventually no longer used. A digital currency of this sort could take a variety of forms, the benefits, and costs of which the ECB and other central banks are currently investigating, being mindful of their broader consequences on financial intermediation.”
“I’ve heard there are some people thinking about an ECB cryptocurrency,” says a source close to the project. “But not much more can be said at this time.”
Cœuré speaks about the risks posed by global stablecoins
Another driver of CBDCs is the advancement of Libra, Facebook’s digital stablecoin announced in June. Coeuré hinted at the ECB working to counter such advances. According to him, relying exclusively on non-European and new ecosystems presents two risks.
“The first relates to the untested nature of some initiatives. Global stablecoin arrangements, for example, raise potential risks across a broad range of policy domains, such as legal certainty, investor protection, financial stability and compliance with anti-money laundering requirements,” Coeuré said.
“The second risk relates to the autonomy and resilience of European payments systems.”
Nonetheless, he added that new currency advances will continue to emerge given changing customer expectations.
“These initiatives highlight the rapidly rising consumer demand for payment services that work across borders and that are also faster, cheaper and easier to use. Among younger people, in particular, there is a willingness and curiosity to use new technologies and try new providers.”
G20 stance on global stablecoins
Prior to this, on October 18, the G20’s press release expressed the numerous concerns raised by the prospect of a global stablecoins.
“While acknowledging the potential benefits of financial innovation, we agree that global stablecoins and other similar arrangements with potential systemic footprints give rise to a set of serious public policy and regulatory risks. “
According to the G20, such risks include those related to money laundering, illicit finance, and consumer and investor protection. According to the leaders of G20, these risks need to be evaluated and appropriately addressed before these projects can commence operation.
These comments show that governments worldwide are extremely worried about the impact of stablecoins. Meanwhile, Coeuré is set to leave the ECB in January to join the Bank of International Settlements (BIS) in leading its innovation hub. The Bank of Italy’s senior deputy governor, Fabio Panetta, is now set to replace him.
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