According to a draft G7 statement, financial leaders from the world’s seven largest economies will be against posting the stable Libra on Facebook until its adequate regulation.
The draft preparations gear towards meet finance ministers and central bank governors in the US, Canada, Japan, Germany, France, Italy, and the UK. It states that digital payments can improve access to financial services, reducing inefficiencies and costs.
Regulating the Libra as Per the G7 Draft
However, emerging from the draft statement, such as payment services, need control, and appropriate regulation; the essence is to avoid compromise of financial stability, consumer protection, privacy, taxes, or cybersecurity.
Without proper oversight, these stablecoins can go into money laundering, terrorist financing, and proliferation. In turn, this will compromise market integrity, governance, and undermine legal certainty.
The draft stated that G7 continues to claim that no global stablecoin project must operate until it meets relevant legal, regulatory, and regulatory requirements through proper design and compliance with applicable standards.
Stablecoins’ ties are to traditional currency or shopping baskets and used for payment or value storage. Stablecoins differ from their more popular but highly volatile cryptocurrency counterparts like Bitcoin in that they focus on price stability. In their quest for stability from the start, stable coins hoped to avoid situations like Laszlo Haniec in 2010.
The higher efficiency of a stablecoin will most likely reach a broader range. Merchants who include these fees in their prices may be more likely to sell their products online due to lower costs. Likewise, customers can manage digital currency balances and make more transactions online without ever returning to fiat currency or feeling the need to have a credit card account.
The G20 Financial Stability Council (FSB) issued ten recommendations in April for a standard international approach to regulating stable coins, backed by social media giant Facebook, which offers stablecoins Libra.
Rising Interest in CBDCs
The G7 project notes that several G7 institutions are studying the opportunities and risks associated with CBDCs.
The European Central Bank said this month it needed to prepare to issue digital euros in addition to banknotes. Its head Christine Lagarde said Monday that the bank takes the creation of the digital euro “very seriously.”
The Bank of England launched consultations on digital sterling, but the Bank of Japan and the Federal Reserve are behind for now.
The G7 project also expressed concern about the increasing threat of ransomware attacks, increasing as the COVID-19 pandemic replaces online economic activities. According to the draft, these attacks, which often involve payments in crypto assets, threaten their primary function as well as collective security and prosperity. It reaffirmed their determination to combat this threat both collectively and individually.