G7 Working Group Raises Concerns About Stablecoins Like Facebook Libra
Facebook’s ambitious plans for launching its own digital currency Libra stumbled on to one more roadblock on Thursday after G7 nations came down hard on ‘stablecoins’, expressing reservations that their launch should only be permissible once all concerns are addressed. In a report presented before finance ministers at the IMF and World Bank meetings, a G7 working group highlighted the risks stablecoins such as Facebook Libra pose on financial stability and the current global monetary system.
Unlike cryptocurrencies, the G7 working group argues that stablecoins need more regulatory oversight as they could be misused for cross-border money laundering and possible terror financing activities. Digital currencies like Facebook Libra could also pose risks to cybersecurity, privacy and taxation.
In a pointed remark against Facebook Libra, the report stated, “Private sector entities that design stablecoin arrangements are expected to address a wide array of legal, regulatory and oversight challenges and risks.”
The Libra Association has reacted to the report by reiterating that it has been working with regulators worldwide to allay their concerns. The association also remarked, “Libra is being designed to work with existing regulatory institutions and apply the protections they provide to the digital world – not disrupt, or undermine, them.”
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