Olaf Scholz, Germany’s finance minister, reiterated his opposition to Facebook on Friday (Oct. 18), and said that the release of the cryptocurrency should be prevented.
Scholz said he was “highly skeptical” of Facebook’s Libra initiative. “We will carefully monitor the situation with all the means at our disposal,” he noted. “I am not in favor of the successful creation of such a world currency because that is the responsibility of democratic states.”
The G7 nations released a statement that no new cryptocurrencies should be released until all of the risks, including the potential for money laundering or the funding of illicit activities, are carefully examined.
The group agreed with Scholz, saying that digital stablecoins could pose a real threat to the world’s financial systems. Scholz stressed that many changes are needed in the space. He said that the goal of making cross-border payments quicker and cheaper should not mean compromising the states’ ability to act on their own.
“There is a need for reform,” Scholz said.
On Thursday, David Marcus, the executive in charge of Libra, said that if it fails, the U.S. could fall behind China in the race for legitimized cryptocurrency, and subsequently lose influence around the world.
According to Bloomberg, while Libra is continually criticized and scrutinized around the globe, China is developing its own state-backed cryptocurrency, which Marcus said would be a real threat to U.S. influence.
“The future in five years, if we don’t have a good answer, is basically China re-wiring [the rest of the world] with a digital renminbi running on their controlled blockchain,” Marcus said. This could mean the potential for “a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency."