Financial Regulators all over the world have expressed their intentions of not putting an immediate ban on Facebook’s own cryptocurrency, “Libra” and other stablecoins. However, such tokens that are backed by official currencies need to meet certain standards and regulations before they become operative. The director of the European Central Bank, Benoit Coeure said in a recent interview that global financial regulators do not intend to put a ban on Libra, subject to the condition that they fulfill the highest standards of regulation.
His comments appear to be significant in the midst of the criticism that Facebook’s Libra has been encountered with troubles from the time the social media giant had made the announcement of launching its own cryptocurrency, in June 2020. Libra was subject to widespread criticism from politicians, bankers and financial regulators across the globe and thus Couere’s remarks cast a ray of hope amidst all the criticism. Coeure had told Bloomberg News, “There is certainly no judgment that stablecoins shouldn’t exist”. He was also quoted saying, “In the case of Europe, neither the Commission nor the ECB intends to make Europe a no-fly zone for stablecoins. But stablecoins will have to meet the highest regulatory standards and adhere to broader public policy goals.”
Coeure, despite being from France, appears to be more positive and constructive vis-a-vis policymakers and regulators in the continent who have expressed very strong opposition against Libra. France has even gone to the extent of saying that it would obstruct the launch of the stablecoin in Europe, primarily in anticipation of the effect that it could cause on financial stability which could, in turn, have an adverse effect on monetary sovereignty.
However, those backing the Libra have decided to go ahead with the project at any cost despite seven of its founding members defecting in the face of the ensuing criticism and the restrictions imposed. The defectors include major payment companies like Visa and Master-card but Facebook appeared to be confident that they would move ahead with their cryptocurrency project. Libra has been planned to be launched in June next year though its launch might be a little delayed owing to the regulatory issues that the virtual currency is facing currently. Amid this, notably, slowly but steadily crypto are gaining traction with the help of cryptocurrency events.
Facebook’s Libra has been labeled as a “wake-up call” in the Eurozone, which may start working on public cryptocurrency to develop a set of common norms that would be applicable for all kinds of digital currency. However, Coeure is set to present a few recommendations by a task-force by the G7 nations on stablecoins to the finance ministers of these economies. The G7 consists of the seven largest and most powerful economies of the world (Canada, Germany, France, Italy, United Kingdom, Japan, and the USA) who are expected to come together in Washington for the annual meeting of the International Monetary Fund. It is to be seen what impact the outcome of this meet has on Libra with the recommendations containing rules regarding the functioning of stablecoins as well as anti-money laundering, payments and so on. Although Libra may have some effect on the stability of the global financial system and could come at a cost of user privacy or nation’s control over their monetary policies, yet it is too early to draw any concrete conclusions.