Benoit Coeure, the chairman of the G7’s international working group on stablecoins and Libra, told Reuters that “a prolonged discussion” discussion between regulators and Facebook may be needed, with money laundering and price volatility among the concerns articulated by the former French economist.
The ECB board member emphasized that Facebook’s global reach means that it must ensure safety and security for its users, stating that Libra must “be safe, robust and resilient from day one.”
“It’s not a learning process: either it works or it doesn’t,” he added.
Regulators May Consider Adjusting Existing Laws to Oversee Libra
Coeure plainly stated that regulators will not allow Libra to launch without first having their concerns addressed, stating:
Authorities are not going to let any such projects happen before we have answers to our questions and before we have the right regulatory framework
Chief among regulator’s concerns are questions regarding whether Facebook would be able to withstand a run on its reserves. Further, authorities fear that the pseudonymous nature of Libra’s original design may facilitate money laundering or the financing of terrorism.
However, Coeure noted that the discussions between Facebook regulators may authorities consider changing existing laws in order to cover Libra. Coeure stated: “Down the road we might find that there are gaps or inconsistencies that would require a prolonged discussion by regulators on how to do it differently.”
The ECB board member indicated that his G7 working group on stablecoins will continue to explore issues pertinent to Libra until the annual meeting of the International Monetary Fund (IMF) in October, during which the matter will be passed to the Financial Stability Board of global financial regulators for further investigation.
Coeure Fears Libra May Erode Monetary Sovereignty of States
Mr. Coeure articulated that projects such as Libra may undermine states’ monetary sovereignty, emphasizing the potentially problematic nature of private companies exercising significant influence over the monetary systems of various nations.
“Market discipline is useful but I wouldn’t see it as progress to shift monetary sovereignty from governments to private multinationals,” he said.
As part of a prepared testimony for the July 16th Senate hearing into Facebook, Calibra head David Marcus stressed that Facebook would not launch its virtual currency until the company has “fully addressed” the concerns of regulators.