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Yesterday, reports proliferated that the European Union may be looking to create its own central bank digital currency (CBDC). But it appears that the union isn’t preparing for such a thing as it just clarified that the recent draft penned by the Finnish EU presidency is geared towards the regulation of stablecoins.
To be precise, the document is aimed towards thwarting the launching of Facebook’s Libra, a global stablecoin that is the source of apprehension among financial leaders as it’s poised to disrupt the traditional banking system. The EU will be discussing tomorrow how to approach Libra and other stablecoins in the future.
Regulators and lawmakers are trying to strike a balance between restrictions that would prevent illicit activities spawned by this emerging currency and fairness that would ensure that the rules don’t suffocate the innovation moving forward. They’re also trying to create a regulatory framework that would encompass existing stablecoins and its other kin that will be surfacing in the future, CoinDesk reported.
Countries expressed their concern over Libra
France and Germany have already announced that they’re going to prevent Libra from operating within its borders following Facebook’s announcement back in June. Sun Tianqi, the chief accountant of China’s State Administration of Foreign Exchange (SAFE), has also said that Libra should be a major concern for countries, citing illegal cross-border financial activities as the reason behind the threat.
Due to this massive resistance, some of Libra’s backers have already dropped out of the consortium including Visa and Mastercard. But this hasn’t stopped Libra from its tracks. In fact, the project is still moving forward with corporate juggernauts and venture capitals refusing to surrender the idea behind the concept.
The dangerous idea behind Libra’s inception
Facebook CEO Mark Zuckerberg believes that Libra will open up the doors for people who have no access to banking, allowing them to finally join the financial ecosystem without the need to involved intermediaries. But regulators argue that the only people that Libra will be helping are drug dealers, money launderers, and terrorist groups.
Romania’s Fiscal Council, Daniel Daianu, recently said that the reason why Libra poses a massive threat towards the traditional financial institution is due to the desire to get rid of central banks altogether. If Libra is allowed to flourish, it could herald the first every global currency in the world, eliminating the need for banks as everyone will migrate to the digital space, BR reported.
Image credit: https://www.flickr.com/photos/bankenverband/
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