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According to a recent report by the BBC, the G7 is developing a report which outlines the dangers of cryptocurrencies such as Libra. Non-sovereign global stablecoins in particular, seem to be of major concern.
G7 is an intergovernmental economic organization comprised of 7 of the world’s most advanced economies. Members include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
The seven countries represent 58% of the world’s net wealth.
The organization has a working group which has identified ‘major risks’ from digital assets— likely directed toward Facebook’s Libra.
According to a recent report by the BBC, the G7 is developing a report identifying the major risks posed by digital currencies. The report— which is yet to be publicly released— highlights the following:
“…the world’s biggest economies warned cryptocurrencies such as Libra pose a risk to the global financial system. The draft report outlines nine major risks posed by such digital currencies. It warns that even if Libra’s backers address concerns, the project may not get approval from regulators.”
While the BBC says Libra was not explicitly mentioned, its reference is indubitable.
The report is unlikely to come as a surprise, since regulators around the globe have consistently remained hesitant to support Libra. Facebook CEO Mark Zuckerberg has been unclear when it comes to a planned launch date, and many initial backers— such as Visa and Mastercard— have jumped ship.
In the coming days, on October 23rd, Zuckerberg is scheduled to testify in front of the House Financial Services Committee. Precisely what legislators will ask about Libra remains unknown at this time.
What we do know, however, is the impact Libra has had by alarming so many regulatory bodies across the globe.
Randal K. Quarles, Chair of the Financial Stability Board (FSB), recently published a letter which included the following:
“The G7 working group on stablecoins is delivering a preliminary assessment of opportunities and challenges posed by ‘global stablecoins’. The G7 working group will be handing off work on regulatory issues to the FSB, and we have already begun work in this area. The FSB has formed a working group, which is tasked with examining the regulatory issues raised by stablecoins that have the potential to reach global scale, taking into account the perspective of emerging markets and developing economies. The group’s work should inform policy approaches that harness the benefits of financial innovation, while addressing associated risks for the financial system, and advise on possible multilateral responses as necessary.”
What do you think the future of Libra looks like? Will it ever see a successful launch? Let us know what you think in the comments section below.
Image courtesy of Sporcle.