FILE PHOTO: Benoit Coeure, board member of the European Central Bank (ECB), is photographed during an interview with Reuters journalists at the ECB headquarters in Frankfurt, Germany, May 17, 2017. REUTERS/Kai Pfaffenbach/File Photo
ZURICH/LONDON (Reuters) – A new breed of asset-backed cryptocurrencies such as Facebook’s Libra are untested and pose serious risks, the European Central Bank’s Benoit Coeure said on Monday, pledging a tough regulatory approach.
Coeure’s comments came during an event at the Bank of International Settlements (BIS) in Basel, where the Group of Seven working group on so-called stablecoins met to discuss regulatory issues posed by the new digital currencies.
“Stablecoins are largely untested, especially on the scale required to run a global payment system,” said Coeure, who chairs the BIS-hosted Committee on Payments and Market Infrastructures. “They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”
Facebook’s planned Libra is the most well-known of the stablecoins, cryptocurrencies usually backed by a range of assets such as traditional money deposits. These new digital coins are designed to overcome the wild price swings that have rendered bitcoin impractical for commerce and payments.
The world’s largest social media network announced plans in June to launch the new currency as it expands into e-commerce, but Libra has come under fire from regulators around the world worried about its impact on the financial system and potential for use in money laundering.
David Marcus, Facebook’s top executive overseeing the project, tweeted after Coeure’s remarks that Libra would continue to engage central banks, regulators and lawmakers to address concerns.
Reporting by John Miller in Zurich and Tom Wilson in London; Editing by Michael Shields and Pravin Char