Today the Financial Stability Board (FSB) published two papers related to digital currency in preparation for G20 meetings. The first on global stablecoins outlines a long list of current and planned legislation and a timetable. The second focused on cross-border payments and gave central banks a timetable to explore central bank digital currencies (CBDC) for cross-border purposes. The IMF and World Bank will be involved in this.
Simultaneously, a draft G7 statement says no global stablecoins can launch until the regulations are in place, according to Reuters. The interesting point about the G7 statement is how legally enforceable it might be, given those regulations don’t exist. Is it telling governments not to grant licenses until then?
The combination’s net effect is that Libra cannot launch before July 2022 but more likely December 2022 at the earliest. And that’s if it has the appetite for the mountain of legal hurdles in its path.
While the stablecoin report outlines a laundry list of very real risks, it doesn’t emphasize that it is the central banks themselves that are most threatened by the potential challenge to monetary sovereignty. That’s because the topic was out of scope. But it acknowledged that feedback from central banks raised this point as a concern.
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