ECB Executive Director: central banks need to beware of Libra

Facebook's Libra cryptocurrency potentially solves a number of problems that exist in the international payments market.At the same time,at the same time, a new development may create new problems, says the ECB Executive Director.

On Wednesday, Benoit Cure, a member of the Executive Board of the European Central Bank (ECB), said that central banks and policymakers should certainly be prepared for Libra.

He added that stablecoins, in particular the Libra cryptocurrency from Facebook, can help people who are not connected to the financial network to make cheaper and faster cross-border payments.

By simplifying access and the cross-border settlement process, the new development will help eliminate two key shortcomings in the existing market architecture.

Libra, which is backed by the social media giantFacebook's networks are connected to a huge user base, giving it "truly global reach." According to Cure, who is also the head of the G7 Stable Coin Committee, the central bank has a number of concerns about stablecoins as they could be used for money laundering and terrorist financing.

Stablecoins could have a significant impact onmonetary policy and financial stability, as coins have the potential to change the mechanism of money supply outside of normal channels, while failure or loss of trust can have systemic consequences.

There is a risk of violating the monetary sovereignty of countries, – notes Cure.

In his opinion, new approaches are needed to regulate innovation, and regulation must be applied “in an internationally consistent manner.”

In the comments, he said that the G7 group on stable coins will present its recommendations on this issue in time for the meeting of the IMF and the World Bank, which will be held on October 14-20.