A pending report issued by the G7 committee moves to warn stakeholder’s about the serious security flaws exhibited by Facebook’s Libra which is pegged to real world assets such as government holdings and national fiat currencies.
The BBC reports a draft of the report that reprimands digital currencies’ issuers in harsh terms. The report warns that despite Facebook’s constant efforts to find a middle ground between the regulators, long lasting concerns regarding the operation of the digital currency still remain. The report also predicts that after all, the Libra cryptocurrency may not even get approval from regulators.
The report does not single out Libra as such. It says that “The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed.”
The report is due for presentation before finance ministers representing the most powerful economies of the world. It seeks to warn all governments whose national currencies and securities are tied to stablecoins such as Facebook’s Libra.
It warns of the serious problems that can translate into global economic crisis. Global cryptocurrencies such as Libra can upset the policymaking tasks of each of these states when setting up the interest rates. Moreover, if Libra is allowed to run wild in the markets, it would infuse Facebook with sufficient power to manipulate the holders of the digital currency.
To add to Facebook’s woes, the drafts also highlighted the possibility that if the users of digital currencies were to lose their confidence in the currency, it would collapse the economies of all those states that are intrinsically tied to Libra.
Same Allegations Against Facebook’s Crypto Project
These allegations are nothing new for Facebook. Over the past few months, they have been reiterated on numerous platforms. The members of the EU, especially France and Germany, cited similar reasons as key shortcomings that may contribute to the rejection of Libra.
Back in June, the G7 commissioned a task force to evaluate the feasibility of incoming stablecoin projects. Based on the findings, this report was drafted and will be presented to the finance ministers in the next annual meeting of the International Monetary Fund (IMF), later this week.
Facebook has consistently been dealt with major blows throughout this year. As a matter of fact, it has lost a quarter of its original membership. PayPal, MasterCard, Visa, Stripe, Pago and many other companies have backed off from the digital currency.
