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As Facebook launched its ambitious global cryptocurrency called Libra, some financial leaders are on their toes working hard to ensure this disruptive innovation doesn’t disrupt the existing financial market or harm consumers.
The ongoing court breach case has sent a red flag to financial leaders, raising worries over the security of the virtual coin Libra and, of course, consumers’ protection.
On June 21, the governor of France’s central bank, Francois Villeroy de Galhau, confirmed that they are working towards creating a special crypto G7 cryptocurrency task force that will study the security of the digital coin and how central banks will ensure crypto coins like Libra are properly governed by existing financial regulations. The task force, which is headed by a member of the European Central Bank board, is expected to look into every corner of security including consumers’ protection and money-laundering laws.
Although Facebook Libra is not the first cryptocurrency in the blocks, it got special interest as it didn’t sit well with financial leaders, who are worried about its negative impact to consumers and the financial market.
France made it clear that it is in no way opposing Facebook creating an instrument for financial transaction; however, it isn’t in support of the instrument being a sovereign currency. As much as it is good to encourage innovation, it is also crucial to add firmness to the equation. “We want to combine being open to innovation with firmness on regulation. This is in everyone’s interest,” Villeroy stated.
Despite the argument that Libra is a stablecoin – which is supposed to be fairly stable in terms of price volatility, Villeroy is yet concerned about the definition of ‘stable’ in this contest. He argued that it is unclear how stable are the instruments to which Libra is attached and how fixed their exchange rates are. It is worth noting that Villeroy previously expressed his preference of stablecoins over Bitcoin.
Opposition to Facebook Cryptocurrency Worldwide
Besides France, which is currently presiding over the G7 nations, other industry officials (such as the governor of the bank of England and several ECB officials) have also expressed their concerns and even moved the motion for the creation of a special crypto task force to ensure virtual currencies are kept in check.
Mark Carney, the presiding governor of the Bank of England strongly asserted that “Libra had to be safe or it would happen.” Carney added without mincing words that Facebook’s Libra must be under the oversight of the world’s major central banks. Other nations in which Facebook Libra is facing opposition is Russia, Australia, India, and even a few EU states.
So, as we expect the launch of Facebook’s Libra, we should rest assured that it is thoroughly regulated from ‘above’ – which is a good thing, in my opinion.