A recent draft report from the G7 consortium revealed their position when it comes to stablecoins operating in existing financial systems. The summary leaned towards a conservative approach that termed stablecoins like Libra as potential threats to markets stability.
The BBC reported that details of this draft address potential risks that may arise once stablecoins are approved. Most notably was the volatility that comes along with dealing cryptocurrencies given their markets history in the past 3 years. It further adds that although projects like Libra might address the concerns, this will not be a guarantee for regulatory approval.
Facebook’s Libra which sparked the conversation around stable coins in most developed economies therefore has to wait for the green light to begin operations. As it stands, the fate of stable coins lies with the authorities and the market is looking forward for response from International Monetary Fund once the report is tabled to Finance representatives at an AGM this week.
What Does this mean for Libra?
Although the draft report is generally about stablecoins, Libra could be of the most affected projects given its popularity and potential at the moment. Regulators such as the Bank of England have already established minimum provisions for them to allow Libra within its financial ecosystem.
In addition, the United States House of Representatives through its Financial Services committee has summoned Facebook’s, Mark Zuckerberg. The committee is set to meet the Tech mogul later in October where he is expected to testify and address concerns around project Libra.
The pressure from regulators and a couple of underlying factors has seen big players like PayPal, Visa and MasterCard pull out of Libra. However, it still remains uncertain on which direction the project will take given the grey in regulation and the need for solutions that will make it an acceptable digital currency.