G7 focuses on the risks of cryptocurrency such as Libra
The heads of government of the member countries will analyze the regulatory framework and other topics related to cryptocurrencies during the next annual summit that will take place in more than a month in Biarritz
Stable cryptocurrencies, such as Libra – Facebook’s digital currency – can boost financial inclusion and lower costs, but also boost “serious risks.” So they must follow the highest regulatory standards to prevent them from being used to money laundering or finance illegal activities, according to the conclusions of the G7 working group, led by Benoit Coeuré, executive of the European Central Bank (ECB).
Stable cryptocurrencies, which seek to reduce their volatility by anchoring their quotation to a reference asset or a basket of assets, have had a “limited” use and issue to date. Although the G7 points out that the support of large technology companies, such as Facebook, or financial institutions to new initiatives of this kind can expand its adoption.
In this sense, despite recognizing that stable cryptocurrencies can reduce and expedite the sending of remittances, boost competition and reduce costs, providing greater financial inclusion, as it is a nascent technology, largely unproven in an environment real to the scale needed to manage a global payment system that includes data protection, competition and taxation.
In addition, the G7 working group warns that these assets could also pose problems related to the transmission of monetary policy, financial stability, good functioning and public confidence in the global payment system”, so it is imperative that the authorities monitor and evaluate the risks and implications for the global financial system.
The group considers it a priority that stable cryptocurrencies “comply with the highest regulatory standards and are subject to prudential supervision“, in addition to having a governance and risk management framework that guarantees operational and cybernetic resilience.
Source: dpa
