EU finance ministers agreed today that private digital currencies such as Facebook’s Libra should not be allowed into the EU until the risks could arise are clearly addressed. The move is further confirmation of the EU’s hardline stance on Libra. Since it was announced last June, Libra has drawn criticism from regulators around the world for its possible impact on the financial system.
In a joint statement today, EU finance ministers said: “No global “stabilization” arrangement will be allowed to operate in the EU until laws, regulatory, challenges and risks are fully identified and addressed. ”
Digital currencies such as Libra, also known as “stabilized coins”, are usually supported by traditional currencies and other securities. Digital cryptocurrencies, such as Bitcoin, do not have such properties, in contrast.
Under sustained pressure from regulators, Libra’s original backers, including payment giants MasterCard and Visa, pulled out of the project in October. But Facebook and the other 20 members of the Geneva-based Libra Association will continue to push ahead with the project, which is expected to be launched in June next year, but is likely to be delayed.
EU finance ministers also said today that they may consider EU regulations regulating digital encrypted assets and currency stability as part of a global plan. Valdis Dombrovskis, the EUROPEAN Union’s financial commissioner, told finance ministers at a meeting of finance ministers in Brussels that the European Commission was already working on the new rules.
In addition, finance ministers praised the European Central Bank’s work on public digital currencies, which could be an alternative to private initiatives such as Facebook Libra. In a document to finance ministers, the ECB said a public digital currency might be needed if payments within Europe remained too expensive.
Last month it was reported that the ECB should consider issuing a public digital currency, according to a draft EU document. The move was largely inspired by Facebook’s Libra project.
But the ECB also noted that the downward trend in cash use could accelerate the adoption of public digital currencies, but that such moves could have a significant impact on the financial system and would require careful assessment.