The G7 group of nations has reportedly drafted a report which says that “global stablecoins” pose a threat to the global financial system.
According to the BBC on Oct. 13, a draft report from the G7 outlined the various risks associated with digital currencies. It also said that, even if member firms of the governing Libra Association addressed regulatory concerns, it may not get approval from the necessary regulators, stating:
“The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed.
[…] Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement.”
The G7 also states that global stablecoins with the potential to scale rapidly could stifle competition and threaten financial stability if users lose confidence in the coin.
“…the introduction of “global stablecoins” could pose a host of challenges to the regulatory community, not least because they have the potential to become systemically important, including through the substitution of domestic currencies.
These include challenges for financial stability; consumer and investor protection; data privacy and protection; financial integrity including AML/CFT and know-your-customer compliance; mitigation of tax evasion; fair competition and anti-trust policy; market integrity; sound and efficient governance; cyber security and operational risks; and an appropriate legal basis.”
The report will purportedly be presented to finance ministers at an annual meeting of the International Monetary Fund this week.
Briefly: Stablecoins with their stability (relative to paper fiat) are threat to stabilty of financial system, because when fiat will go “south”, stablecoins too, and the world suddenly will see the charade.