G7 leaders believe that Facebook’s Libra stablecoin is not yet ready for launch. According to Reuters, the financial leaders from the world’s seven biggest economies will release a statement to oppose its launch, until the stablecoin is properly regulated.
Libra: A Global Digital Currency
As a stablecoin, Libra’s value will be tied to traditional currency or basket of assets and can be used for payments or storing value. Libra promotes that sending money will be as easy as texting, also cheaper than most international wire transfers, from anywhere across the globe.
The stablecoin is often compared to its potential advantage over traditional cryptocurrencies given its billions of users from across the globe. Libra has the power to even take over the most powerful central banks and governments while helping the 1.7 billion unbanked to enter the global financial system.
According to a draft released by the G7 leaders and prepared meeting of finance ministers and central bankers from the United States, Canada, Japan, France, Britain, Italy, and Germany, Libra’s potential to improve financial services, as well as being cost-effective, will have no impact on bankers.
Although, the G7 leaders do caution that without proper regulations, Libra could undermine global financial stability, consumer protection, privacy, cybersecurity, and taxations. It could potentially open the door for money laundering and terrorism markets.
The draft further adds: “The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.”
Libra Different From Bitcoin
Facebook’s initial announcement stated that Libra differs from Bitcoin because it is a permissioned blockchain. As opposed to Bitcoin’s permissionless system where anyone with the right hardware tools can apply the mining protocols and validate transactions.
Libra’s blockchain is centralized where its consensus mechanism, software, and governance are controlled by Libra Association members who can validate transactions.