Financial leaders from the G7 will oppose the launch of Facebook’s Libra stablecoin until it is “adequately” regulated, according to a Reuters report published Monday.
October 13, 2020 | AtoZ Markets – A draft G7 statement showed that the financial leaders of the world’s seven largest economies (United States, Canada, Japan, Germany, France, Italy, and the U.K) will oppose the launch of the long-awaited controversial stablecoin, Libra.
G7 will oppose Libra stablecoin until it is properly regulated
The draft statement prepared for a meeting of finance ministers and central bankers from the G7 said it would halt global stablecoin projects pending appropriate regulatory oversight.
Although it was mentioned that digital payments could potentially improve access to financial services, and remove inefficiencies and high costs, these payment services must be appropriately regulated.
Supervision and regulation are important to prevent the undermining of financial stability, consumer protection, privacy, taxation, and cybersecurity, according to the draft seen by Reuters. The draft read:
“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 G7 draft also included the group concerns regarding the threat of ransomware attacks, which have risen amid the COVID-19 pandemic.
“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,”The draft stated.
FSB stressed on the recommendation of regulating stablecoins
Earlier this year, the Financial Stability Board (FSB), the organization is responsible for analyzing and developing recommendations for G20 concerning global financial systems, published a study on the challenges stablecoins pose for the global economy.
The FSB indicated that while regulatory frameworks already cover many activities related to stablecoins, there are other risks several national regulators may not be prepared for.
The study acknowledges that stablecoins have significant potential to contribute to the development of the global financial system. Digital assets could give millions of people without bank accounts access to the international financial system and provide consumers across the globe greater freedom for low-cost transactions. However, the study also presents that such benefits make stablecoins much riskier for the global economy and financial system.
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