European Central Bank board member Benoit Coeure thinks so. However, Calibra CEO David Marcus disagrees.
Stablecoins such as the highly anticipated Libra coin from Facebook (NYSE: FB) has been the subject of hot debate amongst central banks. Whilst some nations, such as Venezuala see Stablecoins as a possible saviour from economic woes, others see them as a threat.
This week it was the turn of the Libra digital coin taking flak from regulatory authorities. ECB board member Benoit Coeure told central bank officials at a meeting at the Bank of International Settlements (BIS) in Basel, Switzerland, on Monday that Stablecoins such as the long-awaited Libra coin pose significant risks to public priorities.
At the event hosting 26 central banks from across the globe, Coeure said:
“Stablecoins are largely untested, especially on the scale required to run a global payment system,” said the European Central Bank executive board member, who chairs the BIS-hosted Committee on Payments and Market Infrastructures. “They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”
ECB Board Member Benoit Coeure
Friday saw both the French and German finance ministers warn of Libra coin. They said that Libra and other cryptocurrencies pose a risk to consumers, financial stability and even national monetary sovereignty. The comments followed on from warnings made at the G7 meeting in July. Ministers there said that the Group of Seven would not permit Libra to proceed until all regulatory concerns have been addressed.
Prior to Libra coin’s June unveiling, stablecoins attracted very little attention from regulatory authorities and politicians. Stablecoins barely made the crypto news. This almost-anonymity was in part due to size. Tether, the largest of the stablecoins remains only a fraction of the size of bitcoin, the largest of all the cryptocurrencies.
Calibra CEO David Marcus Explains Libar Coin’s Position
Amidst the ongoing meeting between the 26 global central banks and Libra representatives in Basel, Calibra CEO David Marcus moved to protect the position of the Libra Association.
Marcus wrote in a Twitter thread entitled “About monetary sovereignty of Nations vs. Libra,” the Calibra CEO said:
“Recently there’s been a lot of talk about how Libra could threaten the sovereignty of Nations when it comes to money. I wanted to take the opportunity to debunk that notion.”
Calibra CEO David Marcus
Marcus stressed that the Libra coin was not intended to be a new currency. Instead, he sees Libra as a “better payment network and system running on top of existing currencies.” Marcus also pointed out that Libra is to be backed 1:1 by a basket of strong fiat currencies whilst concluding that Libra will continue to engage with all necessary parties and address their concerns.
Libra coin faces strong headwinds from European regulatory authorities. Germany and France are leading the claims that stablecoins such as Libra coin pose a threat to national monetary policies. It is worth noting, however, that both nations are facing strong financial pressures. Germany is on the brink of a recession, with France not too far behind.
