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G7 stops Facebook Libra: regulation first
G7 stops Facebook Libra: regulation first
Stable Coin

G7 stops Facebook Libra: regulation first

By Eleonora Spagnolo - 13 Oct 2020

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The economic ministers of the G7 countries today could impose a new stop to Libra, Facebook’s digital currency.

This was revealed by Reuters, who had access to a draft of the document that will be analyzed during the meeting. The United States, Canada, Japan, Germany, France, Italy and the United Kingdom will attend. 

The document, on the one hand, opens up to digital payments due to their ability to be inclusive. However, the draft goes on to require payment systems to be supervised and regulated to guarantee:

  • Financial stability, 
  • Consumer protection, 
  • Privacy Policy, 
  • Security.

Without these guarantees, the risk is that coins like Libra are used for money laundering and terrorism financing, or other illegal purposes. 

The G7 will affect Libra. And what about stablecoins? 

The meeting of G7 ministers and their possible resolution on Libra, comes at a time when private stablecoins are growing exponentially. Libra in fact is not the only one. Tether, the most used stablecoin in the market, anchored to the US dollar, has a market capitalization of 15 billion dollars

Yet central banks have not been watching Libra nor Tether, and not even China, which is developing its own digital currency.

It seems that the race towards the central bank digital currency (CBDC) seems to have started in response to the challenge of the stablecoins. 

China is already doing tests and could release it within a year or two at the most (the plan is to use it for the Winter Olympics in Beijing in 2022). 

Europe seems determined to issue the digital euro. A public consultation by the ECB will start shortly, but in the meantime, the eurozone could count on the tests that the French Central Bank is doing. Indeed, France, as a member of the Eurozone, cannot issue its own currency. 

The case of Sweden is different because, although it is a member of the European Union, it has kept the Swedish krona as its currency and could soon issue its own e-krona. Which by virtue of the free movement of capital could be used by the whole European Union. Overseas, the United States and the Fed are also studying the digital dollar.

And Libra? Libra continues its project together with the Libra Association and the team working on Novi, the Libra wallet. However, it seems that when the project is technically ready, it will have to face all the perplexities of the nation-states, hostile to a private currency that can be accessed via smartphones. 

In short, the Libra team will have to hold on and try not to give in like Telegram. The instant messaging giant wanted to issue its own cryptocurrency, Gram, on its own blockchain, TON. The hostility of the SEC and US regulators persuaded Pavel Durov to abandon the project.

Libra will have to be more persistent in pursuing its mission of bringing the financial system to the so-called unbanked. Otherwise, it may lose ground to stablecoins and digital state currencies.

 

Eleonora Spagnolo
Eleonora Spagnolo

Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.

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