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Finance ministers of the G20 nations met on Friday to discuss cryptocurrencies and agreed on a strict framework that curbs the powers of cryptocurrencies such as Facebook Libra. In unity, all members agreed that no stablecoin will be allowed to operate unless the financial risks that these entities pose have been fully addressed.
In a charged assault intended to hurt Facebook’s forthcoming cryptocurrency Libra, the finance ministers of France, Germany and Italy adopted a resolution to ban Libra.
The French Finance Minister Bruno Le Maire went on to say that his nation would not tolerate that a multinational company be allowed to possess the same monetary powers as any other sovereign nation. Similarly to his prior statements regarding Libra, he said that while Sovereign nations were subjected to the scrutiny of the people, no checks and balances were currently in place to ensure that Facebook does not trespass beyond its limit.
Previously, a report by a research group commissioned by the G7 had warned the attending members about the catastrophic global affects to the economy if stablecoins were allowed to operate. Since these digital currencies are pegged to traditional currencies and governments’ securities, it is not hard to imagine a scenario where the fall of one would beget the fall of the other.
“While we recognize the potential benefits of innovation in the financial sector, we agree on the fact that stable digital currencies (i.e. backed by a currency ‘basket’ of euros or dollars) have a series of important policy and regulation risks,” Japan’s presidency of the G20 asserted in an official statement.
Concerns Crypto Enables Money Laundering and Terrorist Funding
Apart from these, many voices in the room pointed out the risks related to money laundering and terrorist financing, and also consumer and investor protection. A joint statement of the attending members said that evaluating and addressing these issues should be a high priority for both the regulators and the entities that provide oversight over digital currency issuers.
It is important to note that these issues have always been attributed to digital currencies because of the way these currencies become part in a transaction that gives very little room to know who the seller and the buyer of the crypto coin were.
The G20 has also approached the International Monetary Fund to assess the macroeconomic repercussions of rolling out stablecoins in the cryptocurrency market. In particular it asks the IMF to take into account the concerns and issues of each of the member state.