As part of the G7 meeting in France last week, a series of announcements were made.
The G7 represents the seven largest advanced economies in the world. Finance ministers from these countries descended upon Chantilly, France to discuss a multitude of issues. One of these topics was of stablecoins – relevant due to the fact that Facebook is attempting to create a non-sovereign reserve currency.
The G7 has a “working group” discussing the issue of blockchain-based stablecoins. This group stated these technologies have the “potential to address these shortcomings and deliver greater benefits to users.”
But while there may be benefits, there is sufficient reason to push pause:
“… stablecoins are largely untested in a real-world environment and on the scale required to run a global payment system. Moreover, they give rise to a number of serious risks related to public policy priorities including, in particular, anti-money laundering and countering the financing of terrorism, as well as consumer and data protection, cyber resilience, fair competition and tax compliance.”
The G7 Stablecoin working group identified four “key considerations,” including:
- Stablecoin initiatives must ensure public trust by meeting the highest regulatory standards and be subject to prudent supervision and oversight.
- Stablecoin initiatives should demonstrate a sound legal basis, in all relevant jurisdictions, to ensure adequate protection and guarantees to all stakeholders and users.
- The governance and risk management framework should ensure operational and cyber resilience.
- The management of the assets underlying the arrangement must be safe, prudent, transparent and consistent with the nature of obligations to, or reasonable expectations of, coinholders in order to inter alia ensure broad market integrity and coinholder confidence in good times and in bad times.
The G7 working group “stands ready” to proceed further with the various ministries of finance as well as G20 nations.
Within the G7 Press Pack, the topic of stablecoins, including Facebook’s Libra and JP Morgan’s JPMCoin, were mentioned specifically.
The G7 has “chosen to add these new products to its agenda to examine the underlying risks and opportunities.”
🌍 International taxation
💻 Competition and digital economy
— Direction générale du Trésor (@DGTresor) July 17, 2019