European Union (EU) finance ministers on Thursday said that private digital currencies such as Facebook’s Libra should not be allowed in the European Union until the risks they could pose are addressed.
“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.
Stablecoins are digital currencies, like Libra, that are usually backed by traditional money and other securities, while crypto coins like bitcoin are not.
Ministers also said they consider EU rules to regulate crypto-assets and digital coins as part of a global plan.
Facebook's Libra has attracted criticism from global regulators over its possible impact on the financial system since it was announced last June. Some of Libra’s original backers including payments giants Mastercard and Visa ditched the project in October. The exodus left Facebook and 20 other members of the Geneva-based Libra Association to forge ahead with the project, due for launch by June next year.
The European Central Bank (ECB) is also working on a public digital currency, which could represent an alternative to private initiatives. The bank said a public digital currency could be necessary if payments within Europe remained too expensive.