G7 finance ministers have said that digital currencies like the planned Facebook’s Libra cryptocurrency raise serious concerns and as such must be tightly regulated to make sure that they do not upset the global financial system. Their calls were also echoed by the G7’s central bank heads.
Reuters reports that French Finance Minister Bruno Le Maire, who is the current president of the G7 top world economies said that the group was opposed to the idea that private entities to be given the freedom to develop their own payment systems without any controls or obligations that come with such systems. He explained:
“We cannot accept private companies issuing their own currencies without democratic control.”
Le Maire’s remarks comes after an informal conference of finance ministers in Chantilly, north of Paris, which also involved the central banks governors where they unanimously voiced their opposition to cryptocurrencies and stablecoins.
The central bank governors and the ministers said:
“Stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns.”
In the recent past, governments have been raising concerns that tech enterprises are encroaching on matters that are only meant for government institutions. The G7 finance ministers are warning that Facebook’s upcoming Libra project may weaken the control of economies through the fiscal and banking policies as well as become a security threat in the world.
The G7 members have set up a task force to look at the issues raised by the cryptocurrencies which is headed by Benoit Coeure a member of the European Central Bank (ECB) board. Coeure told the G7 members:
“A global stablecoin for retail purposes could provide for faster and cheaper remittances, spur competition for payments and thus lower costs, and support greater financial inclusion.”
Coeure also warned that stablecoins could also pause a threat in efforts made to fight money laundering, tax evasion and financing of terrorism activities.
On his part, the Bank of France governor who is also a member of the governing council of the ECB, Francois Villeroy de Galhau, also stated that although regulators always strive to encourage innovation, it should not be a detriment to the security of the consumer. He called for more details to clear the gray aspects about Libra.
The concerns about Libra comes hours after Facebook heads were questioned about the Libra project in the US Congress. However, the CEO of Facebook’s Calibra under whose Libra is under, clarified that the project will not be launched until all the regulatory issues have been addressed.
Facebook’s past mistakes and failings have come to haunt it as many policymakers and politicians have been questioning whether the giant tech company will uphold data protection policies. Majority of people are questioning whether the company is fit to start the stablecoin project amid the data protection issues.
In addition, lawmakers are worried that Facebook’s global reach could be a threat to the global financial system.
Will Libra survive the global onslaught from policy makers? Let us know in the comments section.