This month, the G7 (G7) working group released a study on the impact of the Stabilization Coin on the globe. The report analyzes the challenges and risks of stable currency on public policy and regulation from nine levels, but also recognizes the potential of stable currency in cross-border payments.
In response, the Libra Association also published an article to respond. It illustrates Libra's efforts at eight levels: global trends in stable currencies; fair competition and market integrity; AML, KYC compliance and taxation issues; consumer rights; financial stability, systems Sexual risks and cybersecurity; data privacy and portability; private payment networks and governance; opportunities to improve cross-border payments.
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The Libra Association has repeatedly emphasized in the article that Libra does not appear to subvert the central bank's sovereignty over monetary policy, but to expand the function of the currency based on the current system. According to the association, Libra can coexist harmoniously with the digital currency issued by the central bank.
The following is a complete response from Libra:
The Libra Association is pleased with the report of the Group of Seven Working Group, Research on the Impact of Global Stabilizingcoins (GSCs), which recognizes the potential to improve fast, secure and low-cost payment technologies.
The Libra Association is committed to building a system that meets or exceeds current standards at the level of global cooperation in consumer protection, financial stability and money laundering prevention while ensuring that the country has monetary policy sovereignty. Libra's distributed governance structure provides consumers with more choices, a more convenient access experience, higher interoperability and lower prices.
- Libra is committed to working with regulators to achieve strong legal protection for existing currency.
- Libra was originally designed to respect the national sovereignty of monetary policy in the digital arena rather than destroy it.
- Libra aims to promote compliance protection for anti-money laundering (AML), customer understanding (KYC) and illegal financing worldwide.
- Given the importance of the stability of the global financial system and the sovereignty of the country's monetary policy, Libra is designed to work with existing regulators to apply the protection they provide to the digital world – rather than disrupting or destroying them.
Here, the Libra Association and its members hope to respond to key parts of the G7 report:
Stabilizing the global trend of coins
The Libra Association was formed to help realize the long-term potential of Internet technology to improve the access experience and reduce the cost of financial services for billions of people:
The G7 report confirms that stable currencies like Libra are the future of digital currency innovation because it eliminates volatility and increases the security, speed and reliability of payments. Libra can coexist harmoniously with the digital currency issued by the central bank. China has successfully innovated private mobile networks in this area.
Fair competition and market integrity
Libra's network will be open, allowing competition between service providers running on the system:
We expect that the open source nature of the Libra project will inspire start-ups, institutions, financial technology developers and financial services companies in the Libra blockchain to form a global ecosystem for reliable innovation. Banks, financial institutions and start-ups are free to use and accept Libra and apply to join the association. By partnering with banks and reliable financial institutions, financial services are brought to people who are unable to access banking services.
AML, KYC compliance and taxation issues
The Libra Association agrees with the Working Group's focus on this issue and reiterates its commitment to setting reasonable AML/KYC and anti-fraud standards for members to eliminate concerns from regulators and public stakeholders:
The Libra Association has repeatedly stated that it will set standards for its members to maintain AML/KYC and anti-fraud programs to combat terrorist financing and other forms of financial crime. The association will also cooperate with law enforcement investigations. In addition, the association will be able to analyze historical transactions in the Libra blockchain and share signs of suspicious activity with law enforcement agencies, and most of the work to monitor illegal activities will come from service providers. Individuals and entities holding Libra will be taxed in accordance with local laws. We want Libra-based wallets and financial services to provide consumers with the tools to help them file their taxes.
Libra holders will enjoy similar protection and legal rights to existing financial products:
Although people do not have the legal right to buy and sell tokens from the Libra Association, authorized agents will have such contractual rights. By supporting a highly competitive market, authorized agents will enable consumers to efficiently transfer Libra and other currencies.
Financial stability, systemic risk, and cybersecurity
Libra's payment system and Libra are not designed to replace the dollar or any other currency, but to extend the function of these currencies by making payments cheaper and faster. Libra will not weaken the government's sovereignty over monetary policy:
Libra has no intention of changing the role and influence of the central bank in the global financial system. Wallets and other financial services (including exchanges and other capital in and out channels) running on the Libra network will have to comply with local capital controls, etc., which can be tailored to an area to prevent emerging markets from emerging. Large-scale transfer of local currency to Libra. The currency used for the Libra Reserve will be subject to the monetary policy of the respective government. Each Libra will receive a statutory guarantee in the form of bank deposits and cash equivalents (short-term government bonds). This reduces the risk of “bank runs” because Libra is guaranteed entirely by cash and other liquid assets one-on-one, rather than using a partial reserve mechanism like bank deposits. The Libra Association will also set strict network security requirements for node operators and implement protocols that ensure the normal operation of the network, even if some of the authentication nodes are affected, to ensure the resiliency of this payment network.
Data privacy and portability
The Libra Association is committed to protecting the privacy of users' data and will ensure that data protection laws including GDPR (General Data Protection Regulations) are used in related activities:
Only public wallet addresses and amount data for Libra transactions will be collected, stored and processed on the Libra blockchain. As a node certifier, members of the Libra Association will not be able to access, use or share personal data of Libra blockchain end users. Companies that are in direct contact with customers, such as wallet services and exchanges, will be required to comply with data protection laws, including data portability.
Private payment network and governance
Unlike some payment networks, Libra will remain transparent and work with regulators:
Many of the most recent technology infrastructure systems, including the Internet itself and its domain name system, have been developed in collaboration with the public and private sectors. The Libra Association has the same vision and looks forward to working with public entities such as the Central Bank and other institutions to build this system.
Improve opportunities for cross-border payments
The Libra Association is committed to expanding financial inclusion, economic empowerment and participation in the global economy for billions of people and small businesses:
The G7 report recognizes that remittances and cross-border payments are slow, cumbersome, and costly, especially for those without bank accounts and those who are not served in today's financial system. The public and private sectors have an important opportunity to work together to reduce the significant frictions in cross-border payments by leveraging digitally innovative payment solutions. Digital innovation has revolutionized other areas of economic activity.
The Libra Association welcomes the exchange and review of the Group of Seven working groups. The report of the Group of Seven actually points out the framework in which Libra can function effectively. This is an area of continuous development. We welcome the opportunity to continue to participate and hope that policy makers will give regulators time and space to continue to develop sound regulatory rules.