Monday, 03 August 2020

German Finance Minister Speaks Out Against Stablecoins

The Finance Minister in Germany Olaf Scholz spoke out on Tuesday (Sept. 17) about proposed cryptocurrencies like Facebook’s Libra and said Berlin would reject them, according to a report by Reuters.

Speaking about stablecoins, which are cryptocurrencies backed by more traditional financial products, like fiat currency, securities or gold, Scholz said, “We cannot accept a parallel currency. You have to reject that clearly.”

It is anticipated that the cabinet in Germany will come up with a complete blockchain strategy in its ongoing effort to more fully digitize its economy. It also will discuss how to deal with potential problems and challenges that come from using digital financial technologies.

According to a government document, Berlin is working closely with allies in Europe and abroad to prevent stablecoins from being introduced.

“The federal government will work at [the] European and international level to ensure that stablecoins will not become an alternative to official currencies,” the document said.

Germany’s national central bank, the Bundesbank, is also in talks with officials in Berlin about the development of digital currency. There are plans to introduce blockchain-based electronic bonds as well.

Both France and Germany have been vocal about the risks involved with the acceptance of Libra, and aim to block the currency in Europe. Both countries also back the idea of a public cryptocurrency that would remove the need for stablecoins in general.

On Monday (Sept. 16), global central bank officials met with leaders from both Facebook’s Libra Association and JPMorgan to discuss policies and regulation around new cryptocurrencies. The Group of Seven (G7) countries called the meeting to analyze stablecoins like Facebook’s Libra and JPMorgan’s JPM Coin.

The G7 working group on stablecoins is chaired by Benoît Cœuré, chair of the BIS-hosted Committee on Payments and Market Infrastructures and a member of the European Central Bank’s executive board. “As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system,” Cœuré said in the release. “They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”

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