Facebook’s Libra must not start until properly regulated: G7 draft

FILE PHOTO: A small toy figure is seen on representations of the virtual currency on a displayed European Union flag and the Facebook Libra logo in this illustration picture
FILE PHOTO: A small toy figure is seen on representations of the virtual currency on a displayed European Union flag and the Facebook Libra logo in this illustration picture, October 20, 2019. REUTERS/Dado Ruvic/Illustration

October 12, 2020

BRUSSELS (Reuters) – Financial leaders of the world’s seven biggest economies (G7) will say on Tuesday that they oppose the launch of Facebook’s <FB.O> planned Libra stablecoin until it is properly regulated, their draft statement showed.

The draft, prepared for a meeting of finance ministers and central bankers of the United States, Canada, Japan, Germany, France, Italy and Britain, said digital payments could improve access to financial services, cut inefficiencies and costs.

But such payment services had to be appropriately supervised and regulated so that they would not undermine financial stability, consumer protection, privacy, taxation or cybersecurity, the draft statement, seen by Reuters, said.

Without proper supervision, such stablecoins could be used for money laundering, terrorist and proliferation financing, could compromise market integrity, governance, and undermine legal certainty, it said.

“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 draft said.

Stablecoins are tied to a traditional currency or basket of assets, and used for payments or storing value.

The G20’s Financial Stability Board (FSB) set out 10 recommendations in April for a common, international approach to regulating stablecoins, prompted by social media giant Facebook proposing its Libra stablecoin.

(Reporting by Jan Strupczewski; Editing by Toby Chopra)