The Libra stablecoin project launched by Facebook is coming under a lot of scrutiny after more authorities called out the social media giant to shelve it off for now. The stablecoin project has already suffered from a range of setbacks and the social media company is far behind the scheduled launch date. Hence, it is making people wonder how much more the project will be able to take before it finally goes down. Earlier this week, it was reported by Reuters that the G7 had called on Facebook collectively to hold off the launch of its stablecoin, as they are working on addressing the challenges that are faced by most stablecoins.
It was noted in the report that finance ministers and central bank representatives from the United Kingdom, Japan, France, Germany, Italy, Canada, and the United States had called upon the social media company to push the date of the stablecoin’s launch even further. They said they were working on resolving the legal and regulatory challenges associated with stablecoins. According to a draft of the meeting, the G7 stated that no global stablecoin project should be launched until they have managed to address the relevant regulatory, legal, and oversight requirements via suitable design and by following all applicable standards.
This is certainly not the first time that Libra, regulatory issues and stablecoins have bene addressed by the G7. After the project was announced by Facebook in June 2019, a task force had been established by the G7, which was led by Benoit Course who is a member of the European Central Bank. He was tasked with investigating the effects of these asset-backed projects on the global economic systems. The task force explained in its report that it was possible for stablecoins to provide a means of payment and a reliable store of value, perhaps even better than any other currency system available nowadays.
Hence, they could be used for developing global payment systems that are faster, cheaper and more inclusive. But, for all the advantages they offer, these stablecoins could also pose challenges regarding government oversight, monetary policy, and regulation. It was also pointed out by the task force that there was also the ever-present issue of money laundering and terrorist financing that have haunted the currency system for centuries. The report was also skeptical about Facebook and the company’s plans for its stablecoin. The social media giant already had to deal with some major setbacks last year when a number of European nations had come together to prevent its launch.
It was reported last October that a unified front had been presented by five European nations, which included Italy, the Netherlands, Spain, Germany, and France, in the European Union. They wanted to prevent Facebook from launching the project in the eurozone and also pressured all of its other members to give up on this initiative altogether. As far as stablecoins are concerned, it is not the first time they have dealt with such issues. Apart from these issues, the European Central Bank (ECB) has also talked about banks that are run on assets.