EU finance ministers came to an agreement on Thursday (Dec. 5) that digital currencies like Facebook’s Libra have no place in the European Union unless the consequences and pitfalls are adequately sorted out, Reuters reported.
“No global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed,” the ministers said in a joint statement.
The EU and the European Commission also said that they were ready to “take all necessary measures to ensure appropriate standards of consumer protection and orderly monetary financial conditions.”
The decision aligns with the bloc’s strict stance on Libra. EU rules could be considered to regulate digital currency, something the EU commission is already tackling, EU finance commissioner Valdis Dombrovskis said in a public session of a meeting in Brussels.
“Tackling the challenges raised by global stablecoins requires a coordinated global response. The risks raised by stablecoin arrangements should be subject to clear and proportionate regulatory and oversight frameworks,” the statement said.
As a cryptocurrency, Libra is considered a stablecoin because it would be backed by traditional currency or securities.
The finance ministers also emphasized the need for legal clarity regarding any cryptocurrency arrangements. There is “insufficient information” making it hard to decide “whether and how the existing EU regulatory framework applies.”
Ministers applauded a move by the European Central Bank (ECB) to explore creating a public digital currency. The ECB said a public digital currency might be needed “if payments within Europe remained too expensive” and its adoption could be accelerated if the use of cash declines.
The central bank cautioned a public stablecoin could have a significant influence on the current financial system and “would need to be assessed carefully.”
A public digital currency would provide an alternative to Facebook’s Libra as well as other private cryptocurrency endeavors while cutting international transaction costs.
Germany and France released a joint statement in September that called out Facebook’s proposed Libra cryptocurrency as potentially harmful to the financial sector, warning that it could block the coin’s authorization in Europe. The two countries are instead throwing their support behind the idea of a public cryptocurrency.