DIGITAL CURRENCIES MUST BE ‘TIGHTLY REGULATED’

DIGITAL currencies such as Facebook’s planned Libra raise serious concerns and must be regulated as tightly as possible to ensure that they do not upset the world’s financial system, Group of Seven finance ministers and central bankers said yesterday. Finance Minister Bruno Le Maire of France, which holds the rotating presidency of the G7 top world economies, said the group opposed the idea that companies could have the same privilege as nations in creating means of payment – but without the control and obligations that go with it. “We cannot accept private companies issuing their own currencies without democratic control,” Le Maire said. In a summary of the informal G7 talks in Chantilly, north of Paris, the French presidency said the ministers and governors had agreed that “stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns”. Governments are starting to worry that big tech companies are encroaching on areas that belong to governments, such as issuing currency. Facebook’s June 18 announcement of Libra heralded an effort to expand beyond social networking and move into e-commerce and global payments. The G7 are concerned that Facebook’s ambitions for a digital currency might not only weaken their control over monetary and banking policies but also pose security risks. | Reuters