A freshly drafted report by the G7 group of nations, the so-called “global stablecoins” are a serious threat to the global financial system.
Last week, according to the BBC the draft report from the G7 nations specifically described the many risks posed by digital currencies to the global financial order. It was also mentioned that if companies, which are members of the Libra Association addressed regulatory concerns, it’s highly unlikely that they’ll get the desired approval from the regulators.
It was recently reported that one of the biggest threats to the largest banks in the United States, is the potential shadow banking system, which could be created with Libra’s release.
The G7 are adamant in their resolution
It’s the G7’s belief however, that no stablecoin project, should see the light of day until the legal, regulatory and oversight issues and risks are carefully removed and addressed. Even if these risks are addressed in a timely and correct manner, it’s still not certain that any stablecoin project will get the regulatory approval it so desperately desires.
The G7 also believe that global stablecoins have the very frightening potential to scale and completely crush competition effectively threatening the financial stability if users suddenly lose interest in the coin.
This is definitely not a welcomed development for Libra as PayPal was confirmed to have left the Libra Association. There were rumors in the beginning of the month, that PayPal was heavily considering leaving due to regulatory concerns. As the news became official, PayPal stated that they still value Facebook as a customer and are looking forward to working together on different projects in the near future.
After PayPal left, Visa, Mastercard, Stripe and Ebay also quickly decided to follow and a mass exodus from the Libra Association began.
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