Spooked by Libra, EU pledges to manage digital currencies – Benchmarking Change

The European Union’s finance commissioner pledged on Tuesday to suggest new guidelines to manage digital currencies, in a response to Fb’s plans to introduce Libra, which the EU considers a threat to monetary stability.

France and Germany have mentioned that Libra, whose measurement would dwarf cryptocurrencies comparable to bitcoin, may restrict their financial sovereignty.

“Europe wants a standard strategy on crypto-assets comparable to Libra,” Valdis Dombrovskis advised EU lawmakers in a affirmation listening to. “I intend to suggest new laws on this.”

The EU has no particular rules on cryptocurrencies, which, till Libra was introduced in June, had been thought of a marginal concern by most decision-makers as a result of solely a fraction of bitcoins or different digital cash are transformed into euros.

Dombrovskis has resisted regulating digital currencies within the 5 years he has served to date. He made it clear his change of coronary heart stemmed from Fb’s plans for Libra, a digital forex that “may have systemic results on monetary stability,” he advised lawmakers.

The EU is now additionally pushing the G20 for world motion on “stablecoins,” an EU doc circulated final week mentioned.

Fb’s deliberate Libra is the best-known of the stablecoins – cryptocurrencies backed by belongings comparable to typical cash deposits, short-term authorities securities or gold.

Libra’s scale would pose dangers, Dombrovskis mentioned, as a result of Fb’s thousands and thousands of customers in Europe would be capable to pay with the brand new digital forex.

An EU Fee official mentioned there was no timetable but for proposing the brand new guidelines.

Dombrovskis mentioned the crypto regulation ought to give attention to defending monetary stability, defending customers and tackling the dangers of money-laundering utilizing crypto-assets, which might simply cross borders.

Dombrovskis, a former prime minister of Latvia, mentioned the EU wanted to rethink its defences towards monetary crime. He additionally mentioned he noticed “lots of advantage” in shifting some supervision to an EU physique, with out clarifying whether or not that meant establishing a brand new anti-money-laundering company or beefing up present companies.

In his deal with to lawmakers, Dombrovskis additionally pledged a “sustainable Europe funding plan” to unlock €1 trillion (US$1.1 trillion) of personal and public inexperienced funding over the subsequent decade.

He mentioned the plan can be based mostly on ensures and funds supplied by the EU finances and the European Funding Financial institution, though many of the cash is anticipated to come back from the personal sector.