Stablecoins Pose Risks to Public Policy Priorities

A member of the board of directors of the European Central Bank (ECB) argued that stable coins such as the long-awaited Facebook coin Libra pose risks to public policy priorities.

On 16 September, Benoit Coeure, a member of the ECB's Governing Board, commented on regulatory issues regarding Stablecoins at a meeting at the Bank for International Settlements (BIS) in Basel, Switzerland.

"Stablecoin parts have mostly not been tested, especially on the scale required to manage a global payment system. […] They generate a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.

26 global central banks and Libra

The event at the BIS hosted 26 global central banks and the team behind the Libra project to assess the risks associated with the financial stability of the project. This would be the first major meeting between Libra's founders and global decision makers since Facebook revealed its plans for the stablecoin project on June 18th.

Previously, Mr. Coeure had stipulated that the Libra coin would not be launched until global regulators were satisfied. Before it can be launched, it is necessary to ensure the security of the proposed content for users before it can be launched, adding that the protection of user privacy and property rights may require a thorough review and long discussion of the part of the regulators. Coeure also encouraged financial regulators to act quickly to prepare Libra's release.

Response from the Balance team

In the midst of the ongoing meeting between Libra's founders and the world's central banks in Basel, Calibra's CEO, David Marcus, has mobilized to protect the position of the Libra Association.

Marcus argued that the Libra project does not aim to form a new currency, but rather to create a "more efficient network and payment system operating over existing currencies" to provide meaningful value to users around the world. He stressed that there would be no creation of new money, which "will remain strictly the province of sovereign nations".