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The European Central Bank wants a veto on any launch of global stablecoin in Europe, such as Facebook’s Diem. A way for it to make sure that a private currency does not alter its control of monetary policies.
Does European legislation go far enough in regulating digital currencies such as stablecoins? This is not necessarily the opinion of the European Central Bank, the ECB. In a note to EU parliamentarians, it calls for more powers.
The central banks are particularly worried that these global stable corners, like the Diem, could affect their management of monetary policies. In September, the EU unveiled its future rules on crypto-assets.
And for the ECB, this framework must therefore go further, reports Reuters. The ECB would like to have the power to decide. In other words, to decide in fine to authorize the launch of a stablecoin in the euro zone.
Thanks to a right of veto, the central bank believes that it is then in a position to oppose a stability wedge that could jeopardize its control of inflation or the security of payments.
“When an asset reference system is assimilated to a payment system or mechanism, the assessment of the potential threat to the conduct of monetary policy and the smooth operation of payment systems should be the exclusive competence of the ECB,” she says.
The ECB also insists that issuers of stable corners be subject to “stringent liquidity requirements”. And these requirements would therefore be aligned with those applied to money market funds.
These obligations would require, among other things, that issuers have significant cash reserves. The objective would thus be to enable them to cope with significant outflows of customers. But this would not be the only condition required to obtain the green light.
The ECB is also interested in players issuing tokens based on a basket of currencies. According to them, these “should at a minimum grant end-users a direct claim on the issuer or on reserve assets and redemption rights. ยป
While the pressure from stable corners is less pressing in Europe, regulators remain vigilant with regard to digital currencies. In January, the president of the ECB, Christine Lagarde, also pointed the finger at Bitcoin.
Bitcoin “is a highly speculative asset, which has carried out some bizarre business and some interesting and totally reprehensible money laundering activities,” she said last month.