The G7 draft: supervision is not in place and opposes the launch of Libra stablecoin by Facebook

Tuesday, October 13, 2020, 13:29 GMT

According to a draft statement by the Group of Seven (G7), the financial leaders of the seven largest economies in the world will say on Tuesday that they oppose Facebook’s launch of the Libra stablecoin until it is properly regulated.

The draft stated that digital payments can improve financial services, increase efficiency and reduce costs. However, such digital payment services must be properly supervised and regulated so as not to undermine financial stability, consumer privacy, taxation or network security.

Meetings attended by finance ministers and central bank governors from the United States, Canada, Japan, Germany, France, Italy, and the United Kingdom will discuss the draft.

The draft also stated that without proper supervision, this stable digital currency could be used for money laundering, terrorism and illegal financing, which could damage market integrity, governance, and undermine the law.

The draft said, “The G7 insists that the global stable digital currency project should not start operation until it has been properly designed and complied with applicable standards, and fully met relevant legal and regulatory requirements.

The Group of 20 (G20) financial supervision organization said on Tuesday that it will supervise cross-border stable digital currencies such as Facebook’s Libra, and may take more measures in the future to ensure global financial stability.

The Financial Stability Board (FSB) stated in a statement that the existing national-level rules do not fully include the supervision of stable digital currencies. Regulators should ensure that global stable digital currencies are responsible and can protect data security. Effective safeguards against cyber attacks and money laundering.

FSB is an international organization that coordinates transnational financial supervision, formulates and implements global financial standards. Its predecessor was the Financial Stability Forum (FSF), a cooperative organization established by seven developed countries (G7) to promote the stability of the financial system. Later, the organization expanded to include all G20 member states, including China.

The FSB said it will take “appropriate actions” to implement the requirements of the common guidelines and plug regulatory loopholes that may undermine financial stability. The common guidelines proposed by the FSB require compliance with all applicable regulatory standards to ensure that digital stable currencies are capable of responding to financial stability risks before commercial operations, and to introduce new regulatory measures to supervise them when necessary.