Facebook’s initiative to launch a digital currency hs forced regulators worldwide to speak up on crypto regulations. Recently, Benoît Cœuré, an executive of the European Central Bank (ECB), has put forth the bank’s stance on the stablecoin.
Though Cœuré admitted the advantages of Libra in the area of cross-border payments, he pointed out some of the serious concerns with the mainstream adoption of such private currencies.
“These initiatives raise formidable challenges across a broad range of policy domains. Of particular concern are the risks related to anti-money laundering and countering the financing of terrorism, as well as consumer and data protection, cyber resilience, fair competition, and tax compliance,” he stated.
Can proper policies regulate Libra?
The banker also mentioned the role of a G7 working group tasked with the study of such stablecoins and their impact on the mainstream economy.
InstaForex and Borussia Dortmund Open New Chapter in Partnership!Go to article >>
“The group is expected to provide policy recommendations by the time of the IMF-World Bank Annual Meetings in October this year,” he added. “The Financial Stability Board has also started looking into the regulatory implications of these initiatives and will report to G20 ministers and governors.”
He also pointed out the potential conflict of regulatory laws in different jurisdictions, given the global nature of stablecoins like Libra.
“Ambiguity can make ‘stablecoin’ arrangements vulnerable to a loss of confidence – an unacceptable risk in a global payments system with potentially systemic importance. Given that many of the “stablecoins” target retail users, it is critical that the rights of coin holders and the obligations of issuers be clearly communicated and legally precise,” he added.
Earlier this week, the head of the Bank of Japan spoke out on the issues concerning Libra and urged cooperation between global regulators to regulate such digital currencies. He also wants the highest level of regulations imposed on such stablecoins.