A report published by the world biggest economies determines Facebook’s Libra cryptocurrency cannot be approved until it is proven safe and secure.
Based on the report provided by G7 group of nations, crytopcurrencies like Libra prove to be a greater risk for the global financial system. The report draws attention to the nine major risks caused as a result of such digital currencies.
Furthermore, the source states that even if Libra’s backers are mindful of the concerns the project may not be get a green signal from regulators.
The warning followed when Visa and Mastercard stepped out of the Libra project owning to regulatory uncertainty.
Sources allege the report is produced by a group of senior officials from the Financial Stability Board and the International Monetary Fund (IMF) which is also responsible for the rules of G20 economies.
According to the officials, such digital currencies should be sound and should also protect consumers, in addition to ensuring that the coins are not misused for terrorism or for money laundering.
According to news sources, although ministers do not target Libra, “global stablecoins” which are capable to “scale rapidly” can add to potential problems.
Experts suggest stablecoins are different in comparison to Bitcoin since they are fixed to established currencies such as euro and dollar.
“The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed,” says the report statement.
Moreover, the report also doubted the viability of the project although Libra backers draw attention to concerns highlighted by central banks and governments.
“Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement,” the report added.
As a result, Facebook is facing an intensive international scrutiny of its cryptocurrecny project. Furthermore, the social media giant has warned regulatory security would further postpone the launch of Libra.