G7 leaders to oppose the launch of Facebook’s Libra

Facebook's Libra faces big hurdles as G7 leaders decide to oppose Libra's launch until proper regulations are established.

By · Oct 14, 2020 . 6min read

G7 leaders to oppose Libra launch news

According to a Reuters report, financial leaders from the world’s seven largest economies (G7) will oppose the launch of Facebook’s Libra stablecoin until it is appropriately regulated. The draft will be presented on October 13, Tuesday during a meeting. It will include finance ministers and central bankers from the U.S., Canada, Japan, Germany, France, Italy, and Britain. Moreover, the meeting will perceive the pros and cons of digital payments and financial services. The draft asserts that while digital payments could enhance financial services and decrease inefficiencies and costs, such services should be under supervision.

Regulating stablecoins is necessary.

Facebook declared its ambitious plans to launch a global digital currency last year. It advanced its potential benefits over conventional cryptocurrencies. Moreover, it promises to send money worldwide as quickly as texting and more affordable than most international wire transfers.

Stablecoins are bound to traditional currency or basket of assets and used for payments or storing value for the uninformed. As per the G7 leaders, digital services regulation is necessary not to threaten financial stability, privacy, consumer protection, taxation, or cybersecurity. If unregulated, there can be the usage of stablecoins for terrorist financing, money laundering, undermining legal certainty, among other things. However, the G7 draft also cites solicitude about the growing threat of ransomware attacks as the COVID-19 pandemic proceeds to influence economies worldwide.

“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,”

G7 draft

G20 rulebook to regulate digital currencies.

In April, G20 leaders introduced a rulebook of 10 recommendations for a standard, international approach to regulating digital currencies like Facebook’s Libra. According to the report, several G7 authorities view the dangers and possibilities associated with central bank digital currencies. The European Central Bank stated this month that it might issue a digital euro. Additionally, the Bank of England has also begun considering a digital pound sterling.

Presently, it is unclear whether the G7 opposition will have a significant effect on Libra’s launch plans. However, it is not certain if multiple countries would inflict sanctions on the company if it wishes to move forward. Libra has had a topsy-turvy entry into the digital currency arena. Last year, Facebook head Mark Zuckerberg appeared before the U.S. House Committee of Financial Services to promote and defend Libra.

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