The European Central Bank (ECB) has proposed to lawmakers to extend its powers to block the launch of global stablecoins such as the Diem coin, developed with the participation of Facebook (formerly Libra). Reuters reports.
\n
\n
Regulators see a threat from Diem to sovereignty in conducting monetary policy. This could arise from weakened control over payments and the state of the banking sector.
\n
In October, the G7 finance ministers spoke out against the launch of Diem until its issuer is properly regulated.
\n
In September, the European Commission unveiled rules for regulating stablecoins. It is envisaged that their issuers will face \”stricter requirements\” regarding capital controls, investor protection, and supervision. Issuers must undergo stress tests, and comply with capital- and liquidity- adequacy standards.
\n
The ECB noted that, in addition, the regulator should issue the final verdict on the launch of global stablecoins.
\n
\”In cases where the asset-backed mechanism is equivalent to a payment system, the assessment of potential threats to monetary policy and the uninterrupted operation of payment systems should fall within the ECB’s exclusive competence\”, the central bank’s conclusion says.
\n
ECB lawyers flagged the need to amend EU rules. They clarified that the norms should provide for the regulator’s opinion to take precedence over the position of national authorities assessing stablecoin launch applications.
\n
The central bank stressed that issuers \”at a minimum must provide users with a direct claim on reserve assets and redemption rights.\” It is envisaged that these rules will not apply to the \”digital euro\”.
\n
Earlier in November, ECB chief Christine Lagarde said that launching a digital euro, if such a decision is taken, could take two to four years.
\n
In May, the ECB considered three scenarios for Diem’s use and concluded that the amount of funds directed toward the global version of the stablecoin could range from €152.7 billion to €2.93 trillion.
\n
In November, ForkLog reported about the possible launch of Diem as early as January 2021. In December Facebook Financial head David Marcus confirmed plans to issue a coin this year.
\n
ECB Governing Council member Fabio Panetta warned that the issuance of a stablecoin could pose \”potential systemic consequences.\” The German Finance Minister urged to accelerate the development of the digital euro.
\n
Subscribe to ForkLog on YouTube!