“We Cannot Accept a Parallel Currency,” Like Facebook’s Libra, Says German Finance Minister

  • Blockchain strategy to prevent stablecoins from becoming alternative currencies
  • Stable coins' are quite different from speculative assets like Bitcoin

German Finance Minister Olaf Scholz said policymakers could not accept the emerging parallel currencies like Facebook’s Libra.

He said on Tuesday that Berlin would reject any such plans.

Social media giant Facebook (FB) has been in the news for its stablecoin Libra — backed by a basket of fiat currencies — since the day it announced its plan for the same.

“We cannot accept a parallel currency,” Scholz said during a panel discussion in Berlin. “You have to reject that clearly.”

Blockchain strategy to prevent stablecoins from becoming alternative currencies

The German cabinet is expected to adopt a comprehensive blockchain strategy that aims to boost the digital transformation of the country’s economy while tackling the risks as well.

As per this strategy, it will work closely with its European and international allies to prevent stablecoins from becoming alternative currencies.

Berlin will also intensify its ongoing dialogue with Germany's national central bank, the Bundesbank about the central bank digital currency to explore the current state of developments and address any possible risks.

France and Germany have formed a united front against Facebook’s Libra as on Friday both the nation said the stablecoin posed risks to the financial sector that could undermine their authorization in Europe.

Both countries have backed the development of an alternative public cryptocurrency.

Stable Coins' are Quite Different from Speculative Assets

On Tuesday, European Central Bank board member Francois Villeroy de Galhau said that “stablecoins” like Facebook’s Libra highlight gaps in rules and faces a tough regulatory approach.

“'Stable coins' are quite different from speculative assets like Bitcoins. However, regulators will have to keep a very close eye at the global level, and believe me, we will do it,”

Villeroy said.

Facebook meanwhile, as we reported, is applying for a license as a payments service operator in Switzerland.

To which, Villeroy said,

“If issuers of stable coins also want to offer banking services such as deposits, financial investments and loans, then they will have to obtain a banking license in all countries where they operate. Otherwise these activities would be illegal.”

He further said Big Tech could fundamentally redefine the financial system which puts a

“major challenge for regulators and supervisors.”

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