EU finance ministers have today decided to adopt a cautious approach on Libra, Facebook’s stable coin.
In a joint declaration, the ministers have agreed that “no global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.” Such a declaration should not be interpreted as a ban on digital currencies in the EU, as the commission simply aim at establishing its position on stablecoins in advance of any release. In this regard, the European Commission has sent a questionnaire to the Libra consortium to gather more information about the stablecoin and how it will work.
A stablecoin, is a digital currency which is backed by traditional money and other securities.
EU Finance Commissioner Valdis Dombrovskis has informed the ministers that the EU commission is currently drafting a global plan to regulate stablecoins and cryptocurrencies. In the meantime, the European Central Bank (ECB) is also evaluating the emission of a public digital currency, which could become a necessity if payments within the EU remained too expensive and a decline in cash usage was registered. The ECB, however, also warned about the need for carrying out a feasibility study, as the impact of such currency on the financial system could be consistent.