Facebook's Libra stablecoin must not start until adequately regulated, say G7 leaders

A draft statement has revealed that the G7 leaders are going to oppose the launch of Facebook's Libra stablecoin until it is adequately regulated. The draft, that was reviewed by Reuters, was prepared for a meeting of finance ministers and central bankers of the United States, Canada, Japan, Germany, France, Italy and Britain. The draft goes on to say that while digital payments could improve access to financial services, cut inefficiencies and costs, but such services need to be appropriately supervised, reports Reuters.

“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 reportedly reads.

For the uninitiated, Stablecoins are tied to a traditional currency or basket of assets, and used for payments or storing value.

Facebook Libra. Image: Reuters

As per the G7 leaders, regulation of digital services is important so that they would not undermine financial stability, consumer protection, privacy, taxation or cybersecurity. If left unsupervised, stablecoins can be misused for terrorist financing, money laundering, 'undermine legal certainty', among other things.

Reportedly, the G7 draft also mentions concern about the increasing threat of ransomware attacks as the COVID-19 pandemic continues to affect economies all over the world. “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 said.

In April, G20 leaders set out a rulebook of 10 recommendations for a common, international approach to regulation digital currencies like Facebook's Libra.

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