This archive report was first published on 23 July 2019.
Finance ministers and central bankers from the Group of Seven (G7) have expressed serious concerns over Facebook's planned digital currency, Libra, and called for tighter regulation to prevent it from destabilizing the global financial system.
According to a statement released on July 18, 2019, the G7 finance ministers and central bankers agreed that stablecoins and other new digital products, including Libra, raise serious regulatory and systemic concerns.
Finance Minister Bruno Le Maire of France, which holds the rotating presidency of the G7, stated that the group opposed the idea of private companies issuing their own currencies without democratic control.
“We cannot accept private companies issuing their own currencies without democratic control,” Le Maire said.
The G7 also agreed that large tech companies, such as Google, Amazon, Facebook, and Apple, can be taxed in the countries where they make money, even without being physically present there.
They also agreed that there should be a minimum level of tax to discourage countries from competing in a “race to the bottom” to attract business from digital multinationals.
“A minimum level of effective taxation, such as for example the US Global Intangible Low-Taxed Income (GILTI) regime, would contribute to ensuring that companies pay their fair share of tax,” the chair summary concluded.
Libra, which was announced by Facebook on June 18, 2019, aims to provide faster and cheaper remittances, spur competition for payments, and support greater financial inclusion.
However, the G7 also raised concerns over the potential risks associated with Libra, including anti-money laundering and countering the financing of terrorism, consumer and data protection, cyber resilience, fair competition, and tax compliance.
European Central Bank board member Benoit Coeure, the chairman of the taskforce, told the G7 meeting that a global stablecoin for retail purposes could provide for faster and cheaper remittances, spur competition for payments, and support greater financial inclusion.
“However... they give rise to a number of risks related to public policy priorities including anti-money laundering and countering the financing of terrorism, consumer and data protection, cyber resilience, fair competition and tax compliance,” Coeure said.
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