The seven largest economies of the world (the G7), has according to a BBC update today, drafted a report which warns that global stablecoins, such as Libra, stand as a threat to the global financial system.
In the draft report, the G7 reportedly mentioned the significant risks posed by such digital currencies and suggested that even if the firms backing Libra address these regulatory problems, the project may not get the approval of the necessary regulators.
Notably too, although the report which will be presented to finance ministers at the IMF annual meeting this week, did not pinpoint the Libra project that was initiated by Facebook, BBC cites the report as mentioning “global stablecoins” with the potential to “scale rapidly.”
Such global stablecoins, according to G7 members, could suppress competition among other providers and also pose a threat to financial stability if the users lose their confidence in the coin.
The possible loss of confidence is primarily because these stablecoins are not similar to other cryptocurrencies such as Bitcoin, and are joined to established currencies.
With this in mind, it is safe to say that not pinpointing Libra in the report, is only a mere formality with the study looking all but set to result in further problems for the project, which was already plagued by all kinds of internal and regulatory difficulties.
Recently, many significant Libra partners such as PayPal, Visa, Mastercard, Stripe, and eBay all backed off on the project while Facebook is currently facing a lawsuit for trademark infringement.
Finco Services of Delaware (a company that provides banking services through a mobile app with the name Current) as we reported initially sued Facebook for alleged trademark infringement, unfair competition, and “false designation of origin” with regards to the Libra logo.
Aside from that, Mark Zuckerberg, the CEO of Facebook, will testify before the US House of Representatives Financial Services Committee on Oct.13 regarding his companies’ intention for Libra.
That follows an earlier appearance before the same Congress by Libra project Lead, David Marcus, back in July.
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