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Finance chiefs from the world’s leading nations today voiced unanimous concern over the destabilising impact of Facebook’s Libra initiative on the world’s monetary system.
"It poses serious difficulties—technical and political,"French Finance Minister Bruno Le Maire told reporters in Chantilly, France, where the G7–a group consisting of Canada, France, Germany, Italy, Japan, the UK, and the US–meeting took place. Officials spoke of “the need to act quickly," and to subject stablecoins, such as Libra, to the “strictest supervision."
However, unconfirmed reports also suggest that a government-backed crypto version of an international payment system similar to SWIFT is in the works. A source claiming familiarity with the project told Reuters, on Wednesday, that Japan’s government is leading a global push to set up a global network for cryptocurrency payments.
The as-yet-unannounced initiative is reported to have gained clearance from the G7’s Financial Action Task Force (FATF) who will monitor it. It was proposed by Japan’s Ministry of Finance and the country’s financial regulator, who are said to be working closely with the governments of the other G7 nations.
In 2017, Japan became the first country in the world to recognise bitcoin as a legal form of payment, and the nation has recently made strides to regulate and license cryptocurrency exchanges above and beyond what exists elsewhere. During the recent G20 summit, Japan presented a guide for other participating nations, demonstrating how it’s managed to walk the regulatory tightrope.
A regulated cryptocurrency, developed by Japan and endorsed by the G7 nations, would certainly be preferable to Libra. But it’s a testament to Facebook’s power that the concerns raised by the project—from consumer protection and privacy to global reach—have, this week, forced politicians and financial regulators across the world to call, urgently, for such new solutions.
Despite their fears of an unregulated currency wielded by a tech giant, the G7 recognise the pressing need for innovation in international money transfers, a need which Libra seeks to fill.
“Users would find [Libra] useful in making international money transfers because it would be cheaper than the current system,” Finance Minister Taro Aso told reporters at the G7 meeting. However, he did not discuss the Japanese-led crypto payments system.
But G7 officials—who include Fed Chair Jerome Powell, Treasury Secretary Steven Mnuchin and the Bank of England’s Mark Carney—are united in the belief that schemes such as Libra need to be strictly regulated to ensure they are stable, safe and free of criminal activity.
Earlier this week, U.S. lawmakers gave Facebook’s David Marcus a grilling over the Libra project. The G7’s fears add to the international backlash building against the proposed digital currency, and the desire to replace it with a version that policy makers can more easily control.
As per German Finance Minister Olaf Scholz talking to reporters at the G7 gathering, “Libra is on everyone’s mind.”