European Central Bank Executive Board member Benoit Coeure has said that financial regulators across the world must move fast in preparation for the planned Libra’s entry into the financial system, Bloomberg reports.
Speaking in Aix-en-Provence in southern France, Coeure said:
“It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous, we have to move more quickly than we’ve been able to do up until now.”
Since it announced its plans to launch a cryptocurrency (Libra), Facebook has made many regulators and policy implementers scrambling to catch up. For instance, the three major financial sector regulators in the UK have announced that they are working together to have a joint response to Libra.
The Bank of England Governor Mark Carney has claimed that they are approaching the new cryptocurrency with an open mind but not an open door.
Libra has also led to mixed reactions in the US where around 30 influential groups and lobbyists including some Congress members calling for a halt of the initiative until all ‘profound questions’ it has raised can be answered. It is on this basis that David Marcus, the lead executive of the Libra project has been summoned to testify before Congress before the end of this month.
According to Coeure, the emergency of cryptocurrencies has exposed deficiencies in the current financial regulations and the hesitancy by the banking sector to update their existing technologies. He explained:
“All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things.”
ECB Approaching Cryptos with Caution
The ECB has generally approached crypto assets with caution, with one bank official predicting that crypto will end up as a “complete load of nonsense” in January. The bank has also discussed the possible benefits and drawbacks of central bank digital currencies.
Coeure’s positive stance could be the first step for the European Union on becoming a crypto-friendly region. The nomination of IMF Managing Director Christine Lagarde as the incoming head of ECB is also a positive move towards the crypto industry.
Lagarde has been known for her positive statements on crypto, stating once that digital currencies will cause “massive disruptions.” Being pro-cryptocurrency, Lagarde argued that regulations around the crypto industry are inevitable. However, regulators have to keep an open-mind when building such frameworks.
“Policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit,” she said.
According to Lagarde, similarly to the dot-com companies that survived that crash – the cryptocurrencies that stay with us will have a substantial impact on the financial system.
Coeure’s reaction is in line with the predictions of Jeremy Allaire, co-founder and CEO of payments company Circle. In an interview with Bloomberg released earlier this week, Allaire noted that he hopes Libra will trigger the development of national policies concerning digital assets.
Is Europe finally accepting that cryptos are here to stay? Let us know in the comments section.