Central bankers and finance ministers from the Group of Seven (G7) are opposing the launch of Facebook’s Libra until it is properly regulated, Reuters reported on 12 October.
According to the report, a draft G7 statement acknowledged that digital payments could improve access to financial services, but also that global stablecoin projects need to be stopped before a proper regulatory oversight is established. Such projects, the draft continues, could undermine financial stability and consumer protection, as well as be used for money laundering and terrorist financing.
The draft reads:
“The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.”
The G7 is comprised by the world’s largest economies, namely the United States, Canada, Japan, Germany, France, Italy, and the U.K.. A group of representatives from the seven countries assembled last June to determine how central banks can regulate cryptocurrencies, and in October came out with a report stating that “global stablecoins” posed a threat to the global financial system.
That specific G7 group was created shortly after Facebook released the whitepaper of its stablecoin project, Libra, in June 2019. Ever since it was announced, Libra has faced opposition from regulators around the world, and especially the U.S., where Congress went as far as to request that Facebook freeze all development of the project. The regulatory pushback was so fierce that by November the project had lost several of its backers.
The draft also revealed that a number of G7 authorities are looking into the opportunities and risks present in Central Bank Digital Currencies (CBDCs). The asset class has been a hot topic in 2020, with more and more countries forming research teams to look into CBDCs. China has also been making a lot of noise around this topic, with the country claiming that its digital yuan has already been used in 3 million transactions during its trial. The country’s central bank is also holding a giveaway, in which $1.5 million worth of the digital yuan will be given away to citizen of Shenzhen.