Some of the largest economies in Europe are calling for strict regulations to govern the digital currency industry. France, Italy, Spain, the Netherlands and Germany urged the European Commission to formulate policies that preserve the region’s monetary sovereignty.
In a joint statement, finance ministers from five countries called on the European Commission to ensure that these regulations are enforced to protect consumers and preserve state sovereignty in monetary policy.
The Commission must also prohibit the use of stablecoins in the region “until legal, regulatory and oversight challenges had been addressed,” they stated, as reported by Reuters. Europe is in the spotlight in the emerging stablecoin race, with Facebook’s Libra Association being based in Geneva, Switzerland.
All stablecoins must be pegged at a ratio of 1:1 with fiat currency, “with reserve assets denominated in the euro or other currencies of EU member states, and deposited in an EU-approved institution,” the ministers stated.
All entities operating as part of a stablecoin scheme must also be registered in the EU.
The ministers believe that it’s their task to keep financial markets stable, the German Finance Minister Olaf Scholz told reporters. This task has been the responsibility of the state, and it must remain so, he added. He further believes that authorities must take a tough approach towards the industry, banning any private company that doesn’t adhere to all the requirements.
His French counterpart Bruno Le Maire remarked, “We’re waiting for the Commission to issue very strong and very clear rules to avoid the misuse of cryptocurrencies for terrorist activities or for money laundering. […] the ECB, is the only one to be allowed to issue a currency. And this point, it’s something that cannot be jeopardized or weakened by any kind of project including the so-called Libra project.”
Le Maire has been vocal in opposing Libra. In September 2019, he suggested that a stablecoin can’t be allowed to operate in the European Union.
“This eventual privatization of money contains risks of abuse of dominant position, risks to sovereignty, and risks for consumers and for companies,” he stated.
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