Facebook’s digital currency dealt another blow

As reported by BBC News, “In a blow to the social media giant, the world’s biggest economies warned cryptocurrencies such as Libra pose a risk to the global financial system.

“The draft report outlines nine major risks posed by such digital currencies.

“It warns that even if Libra’s backers address concerns, the project may not get approval from regulators.

“The warning comes just days after payments giants Mastercard and Visa pulled out of the Libra project, citing regulatory uncertainty.

“The G7 taskforce that produced the report includes senior officials from central banks, the International Monetary Fund (IMF) and the Financial Stability Board, which coordinates rules for the G20 economies.

“It says backers of digital currencies like Libra must be legally sound, protect consumers and ensure coins are not used to launder money or fund terrorism.

“While the report, which will be presented to finance ministers at the IMF annual meetings this week, does not single out Libra, it says ‘global stablecoins’ with the potential to ‘scale rapidly’ pose a range of potential problems.

“Stablecoins like Libra are different to other cryptocurrencies, such as Bitcoin, because they are pegged to established currencies such as the dollar and euro.

“While this is designed to limit big swings in their value, the report says global cryptocurrencies like Libra can pose problems, including for policymakers setting interest rates.

“The report also warns that Libra could stifle competition among other providers and even threaten financial stability if users suddenly suffer a ‘loss of confidence’ in the digital currency.”

Continue to read the full story at BBC News.

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