Facebook’s plans to launch its Libra cryptocurrency faced a new hurdle on Thursday, when the Group of Seven wealthy nations said such “stablecoins” should not be allowed to launch until the profound international risks they pose are addressed.
When launched on a wide scale, stablecoins – digital currencies usually backed by traditional money and other assets – could threaten the world’s monetary system and financial stability, a G7 working group said in a report to finance ministers gathered in Washington for the IMF and World Bank fall meetings.
The emerging technology, which is now mostly unregulated, like other cryptocurrencies, could also hinder cross-border efforts to fight money laundering and terror financing, and throw up problems for cyber-security, taxation and privacy, the report said.
“The G7 believes that no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks” are addressed, said the task force, chaired by European Central Bank board member Benoit Coeure.
“Private sector entities that design stablecoin arrangements are expected to address a wide array of legal, regulatory and oversight challenges and risks,” the report added.
The report underscores concern among global policymakers about stablecoins such as Libra, and presents a further headache for Facebook’s project after a chastening week.