By Irene Kostaki – Journalist, New Europe
Just as an international financial monitor issued warnings to world leaders about the use of cryptocurrencies like Libra of Facebook, the governor of the French central bank, Francois Villeroy de Galhau, has announced that France is forming a task force within the Group of Seven (G7) nations to examine issues concerning the launch of such a wide-scale project involving cryptocurrencies.
The G7, a group of the world’s wealthiest advanced economies as defined by the IMF that, at present includes Canada, France, Germany, Italy, Japan, the U.K. and the US, is currently being chaired by France.
Villeroy suggested that the crypto task force would be headed by European Central Bank board member Benoit Coeure and would look at how cryptocurrencies are regulated to avoid money laundering and other problems. The move is in line with the concerns expressed by France’s finance minister, Bruno Le Maire, who said he worries that the Libra could possibly replace traditional currencies.
“It is out of question’’ to allow the Libra to “become a sovereign currency,” Le Maire said last week,”it can’t and simply must not happen.”
Randal K. Quarles, the chief of the Financial Stability Board, or FSB, warned that “wider use of new types of crypto-assets for retail payment purposes would warrant close scrutiny by authorities to ensure that that they are subject to high standards of regulation.” According to Quarles, “crypto-assets do not currently pose a risk to global financial stability, gaps may occur where crypto-assets fall outside the scope of regulators’ authority or from the absence of international standards.”
Finance officials are now scrambling to regulate cryptocurrencies after Facebook ’s introduction of Libra, a digital form of cash linked to existing currencies. Quarles did not mention Libra by name, but the timing and the words that such technological innovation could make the financial sector more efficient and inclusive and that cryptocurrencies do not, at the moment, pose a risk to global financial stability.
In addition to chairing the FSB, Quarles sits on the board of governors of the US Federal Reserve as regulation vice-chair. The FSB is an international body that monitors and makes recommendations about the global financial system while aiming to coordinate national financial authorities and standard-setting bodies.
Facebook is not alone in its struggle to establish the Libra as a dominant means of payment. It has joined forces with eBay, Mastercard, Visa, Spotify, Paypal, Uber, and Vodafone to make Libra a global currency that can be used by billions of people, including those who have no bank account or other access to a financial system.
As part of their closing statement following the last G-20 summit in Buenos Aires, the leaders of the world’s 20 largest economies said that they were concerned about the use of a cryptocurrency like the Libra for money laundering and financial terrorism purposes. At the time of the Buenos Aires summit, last winter, cryptocurrencies such as Bitcoin were not considered a threat to financial stability because the amounts of money involved were tiny compared to the size of the global financial system.