Source: Reuters , original author: Huw Jones, Tom Wilson
Source: Odaily Planet Daily, Translator: Yu Shunsui
The Group of 20 (G20) regulator said that major global economies need to fill in the gaps in their rulebooks to avoid destabilizing digital currencies such as the Libra stablecoin planned by Facebook.
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Stablecoins are linked to traditional currencies or a basket of assets and are used to pay or store value. Promoted by social media giant Facebook's proposal for Libra stablecoin, the Financial Stability Board (FSB) made 10 recommendations on Tuesday (April 14), proposing an internationally accepted method for regulating stablecoins.
The FSB said that regardless of the technology used, they should face the same rules as other companies with the same risks.
The FSB stated that existing financial rules, such as payments and customer checks, are generally wholly or partially applicable to stablecoins and can at least deal with some of the risks they generate. But the coverage may vary from country to country, exposing gaps in the supervision of cross-border stablecoins.
These recommendations provide for flexible cross-border cooperation to avoid conflicts between stable jurisdictions and another jurisdiction.
The FSB stated that “the relevant authorities should clarify their supervisory powers when necessary and resolve potential gaps in their domestic frameworks to fully respond to the risks posed by global stablecoins.
The FSB pointed out that stable currency operators must effectively manage risks, have operational flexibility, have measures to prevent cyber attacks, and systems to prevent money laundering and terrorist financing.
According to previous reports, several major supporters of Libra (including Visa, Mastercard and PayPal) have withdrawn after Libra was questioned by regulators and multinational central banks. Regulators and multi-national central banks have stated that Libra cannot launch until the appropriate rules are introduced.
National central banks said that Facebook ’s potentially huge influence in cross-border payment will make it an instant, systemic competitor to traditional currencies.
Facebook said last month that it is still planning to launch Libra, but is also developing a digital version of the government-backed currency.
The Swiss-based Libra Association will issue and manage the digital currency Libra, and it welcomes the review by the regulatory authorities. The association declined to comment further.
As the use of cash payments decreases, central banks around the world are also studying the possibility of issuing digital currencies themselves. The potential launch of Libra poses a threat to the central bank ’s currency control, which is a major factor accelerating its research work.
The FSB also stated that although the current stablecoin is not large in scale and does not pose a risk to financial stability, this situation may change if the amount of use increases significantly.
At present, the market value of the largest stablecoin Tether is about 6.3 billion US dollars, but it is still very small compared to Bitcoin. Except for cryptocurrency transactions, it is rarely used by people.
The public consultation of the Financial Stability Board will continue until July 15, and the final report will be published in October.