European central bankers argue that it’s oversight of Facebook’s cryptocurrency

FRANKFURT (Reuters) – Three European and central bankers claim to be the supervision about Facebook’s planned virtual currency, in order to ensure that it does not pose a risk to the financial system, or it can be used for money laundering purposes.

The small toy figures are to be seen in the representations of the virtual currency in the front end of the Scale, the logo in this illustration picture the 21 of June, 2019 at the latest. REUTERS/dado Ruvic/Illustration

Facebook attracted a global interest this week when it announced plans to create a cryptocurrency, called Libra, which is part of an effort to expand into digital payments.

Facebook said the weighing Scales would have to be backed up by real-world assets, including bank deposits and short-term government securities to make it more stable, and therefore not very practical for making payments and money transfers over to other cryptocurrencies, such as bitcoin.

With the potential to reach billions of users on the internet, and with the support of the payment giants such as Visa, Facebook is hoping the balance will not be the only power in the transactions, but to provide for people without bank accounts access to financial services for the first time.

However, the central bankers of great Britain, France, and Germany, it said on Facebook to expect scrutiny.

“It has to be safe, or it’s not going to happen,” Bank of England Governor Mark Carney told the BBC in an interview broadcast on Friday.

“We, the Fed, the major global central banks, and supervisory authorities would have direct regulatory oversight),” he said, referring to the united states Federal Reserve.

Global central banks have so far largely refrained from regulating the digital currency, after it failed last year to reach an agreement on how to do it, and they were too small and the risk to the financial system.

With other global regulators, has been monitoring the growth of cryptocurrencies. The Financial Action Task Force, a Paris-based global anti-money laundering watchdog, is expected to announce the rules for the use of digital currencies for illicit purposes.

However, the Scale of the announcement of the issue on their radar, with the focus now shifting from bitcoin to the so-called stablecoins, such as Facebook, the Scales of which are supported by real-world assets.

France said on Friday they would have a task force on the matter, as part of its presidency of the Group of Seven club of the world’s seven largest economies. It will be co-chaired by the European Central Bank board member Benoit Coeure.

“It will be in the next few months to examine the anti-money laundering requirements, and consumer protection and operational resilience, and in all matters relating to the conduct of monetary policy transmission,” she said of the French central bank’s governor, Also, in the Galhau.

His German counterpart Jens Weidmann, warned that the stablecoins are likely to undermine the banks, as they were a very popular alternative to bank deposits in the major currencies.

“They are undermining the take up of fixed-term deposits of banks and their business models,” Weidmann said on Friday. “It would be to disrupt the transaction, banking, and financial markets and intermediation.”

One of the issues that need to be considered by the G7, the task force has held, or where and how the local currency is at the heart of the bishops would be saved, according to a letter seen by Reuters.

This is a crucial point for stablecoins. The chain’s highest-profile of stablecoin, with coins valued at approximately $3.6 billion in the face of questions about whether it owns enough u.s. dollars to get the pennies into circulation. The company has said it has enough reserves.

Facebook has been grappling with the public backlash following a series of scandals, ranging from privacy-infringements to the accusations that it is restricting the freedom of speech and expression.

Reporting by Francesco Canepa; additional reporting by Tom Wilson; editing by John Stonestreet

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