The finance commissioner of the European Union on October 1, 2019, to suggest new rules in regulating digital currencies. This is in reaction to the plan of Facebook in introducing Libra. The European Union actually considers this as a risk to financial stability.
Furthermore, Germany and France said that Libra, who is, in fact, the size of a dwarf digital currency like bitcoin might cause a limitation to their monetary sovereignty. They even said in a confirmation hearing that Europe needs a typical approach on the crypto-assets like Libra, hence proposing rules is essential.
There is no particular rules or regulation on cryptocurrencies that had been referred to as a marginal issue by some decision-makers as only a portion of bitcoins and some other digital currencies can be converted into euros.
Valdis Dombrovskis –a Latvian politician who’s nominated as the Executive Vice President-Designate of the European Commission –has fought the regulation of then digital currencies in the five (5) years that he has served thus far.
He also cleared that this change of heart on the said matter has stemmed from the plans of Facebook for Libra –a digital currency, which they thought to have some systematic effects on financial stability.
The European Union is now aggressively urging G20 for the worldwide action on the ‘stablecoins’ –and European Union document that has circulated prior.
The plans of Facebook on Libra are actually the most well-known of all the stablecoins or digital currencies that are backed by assets like gold, short-term government securities, as well as conventional money deposits. It is so much like the free pokies in Australia, which uses monetary deposits.
The scale of Libra might actually pose risks since the millions and millions of users of Facebook in Europe alone might be able to compensate with the new cryptocurrency. Furthermore, an official of the European Union Commission also said that there’s no schedule yet for the proposing of new rules.
Valdis Dombrovskis said that the regulation of the new cryptocurrency must focus on the defense of financial stability, tackling the money-laundering risks using crypto-assets, as well as protecting the consumers –these may easily cross the borders.
The Latvian politician also said that the European Union must rethink its defenses, counter to the financial crime. He also suggests that he saw so many merits in the transition of some supervision into a European Union body. This is without the clarification of whether that meant giving a boost to the existing agencies or creating a new anti-money laundering agency.
The former prime minister of Latvia also pledged in his address a sustainable Europe investment plan, in order to unlock $1.1 trillion or 1 trillion euros of public and private green investment over the coming decade.
Dombrovskis said that the plan might be based on the funds and guarantees that are provided by the European Investment Bank and the budget of the European Union, even though most of the money is actually projected to descend from different private sectors.Updated Date: 17 October 2019, 20:31