Finance ministers from the European Union have agreed that private digital currencies including Facebook’s Libra should not be allowed in the European Union until potential risks surrounding them are clearly addressed.
The move confirms the tough stance claimed by the EU on stablecurrencies such as Facebook’s Libra, which incidentally has attracted criticism from global regulators over its potential impact on the financial system, since it’s announcement in June.
“No global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed,” said the ministers in a joint statement.
Stablecoins are digital currencies, that are usually backed by traditional money and other securities; cryptocurrencies on the other hand, such as bitcoin, are not. Both however are classified as cryptocurrencies.
Under sustained pressure from regulators, a quarter of Libra’s original backers which include Mastercard and Visa, stepped away from the project in October 2019.
Libra is scheduled for launch by June 2020.
EU ministers have stated, they could consider EU rules to regulate crypto-assets and stablecoins as part of a global plan and the EU commission is already working on this new regulation, said EU finance commissioner Valdis Dombrovskis in a public session of their meeting in Brussels.
In a document presented to finance ministers, the ECB disclosed, a public digital currency could be necessary if payments within Europe remained too expensive.
Its potential adoption would be accelerated by signs of lower cash usage, said the ECB while warning that the impact of such an initiative, on the financial system, could be very large, and therefore needs to be assessed carefully.