European Central Bank: Libra and other stable currencies have not undergone large-scale testing, which will bring serious risks

According to Reuters, the European Central Bank (ECB)'s Benoit Coeure warned of the risks of "stabilized coins" such as Libra.

As a member of the board of directors of the European Central Bank, Coeure told central bank officials from the Basel International Bank of Real Estate (BIS) that these new virtual currencies were largely untested and promised to impose stringent regulatory measures on them.

Although cryptocurrency has been born for more than a decade, the bitcoin-dominated digital currency is still a largely unregulated and opaque industry that provides users with near-anonymous services and engages in hacking, robbery and hacking for some lawless elements. Illegal activities facilitate.

The stable currency is supported by assets with real value, unlike the pure cryptocurrency. The most famous of these is Facebook's cryptocurrency Libra, which is backed by assets such as traditional currency deposits, short-term government securities or gold.

But since the white paper was announced in June this year, Libra has been questioned by governments, central banks, and legislative and regulatory agencies that are thought to have a destabilizing effect on the global financial system and used for money laundering. Coeure, as chairman of the BIS Payments and Market Infrastructure Committee, said at the event,

“Stabilized coins are largely untested, especially at the scale required to run a global payment system. They bring many serious risks associated with public policy priorities. Regulators need to use high approval standards. ”

On Friday, French and German finance ministers said at the euro zone finance ministers meeting that Libra and other cryptocurrencies pose risks to consumers, financial stability and even currency sovereignty.

A spokesperson for the Libra Association, which manages Libra's cryptocurrency, said the event in Basel was "constructive" and said the association is committed to working with central banks and regulators to achieve its stable and low-cost payment system. The goal.

The spokesperson said, “We recognize that blockchain is an emerging technology and policy makers must carefully consider how their applications fit into financial system policies.”

After Coeure's speech, Facebook blockchain owner David Marcus issued a tweet saying that Libra would not pose a threat to countries' power to control monetary policy. He said that Libra's design goal is a payment network operated on an existing currency basis. No new currency is created and it will not pose a threat to the sovereignty of the country.

Image source: pixabay

By Xiu MU

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