Facebook and its Libra project were the likely targets of a new report drafted by the G7 taskforce to highlight the risks that “global stablecoins” can pose to the global financial system if allowed to enter the scene.
According to a BBC update on Oct 13, the G7, which is an international body consisting of seven of the most advanced economies as per the International Monetary Fund (IMF) standards, is not a fan of “global stablecoins.”
The new report, without directly mentioning Facebook’s Libra purportedly brought to limelight the numerous risks posed by global stablecoins, which can “scale rapidly” upon launch.
The core argument is that even if the companies backing such a project manages to get regulatory approval, that will not mitigate the risks, which include the use of such cryptocurrencies to launder money and fund terrorism.
Other risks mentioned in the report involves the possibility that ‘global stablecoins’ affect policymakers setting interest rates, stifle competition among other payment providers, or even create financial instability if users ever lose interest in such a cryptocurrency.
It is likely with these factors put in perspective that the G7 taskforce reportedly wrote:
[We] believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed. [...] Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement.
Given such a stance, the odds have further increased against Facebook’s planned Libra amid other regulatory scrutinies. The G7 taskforce is reportedly set to present its findings to finance ministers at an annual meeting of the International Monetary Fund this week.
Meanwhile, it also adds to Facebook's regulatory woes, which we reported last week, now includes a lawsuit alleging that the company’s logo for the Calibra wallet constituted an infringement of another firm’s design.