German finance minister pans libra name
German Finance Minister Olaf Scholz sees Libra as a threat Photo: Pixabay)
Libra,  Politics,  Regulation

German finance minister pans Libra’s new name

Olaf Scholz called the Facebook-founded stablecoin project ‘a wolf in sheep’s clothing” that threatens governments’ control over the economy

By  / December 7, 2020 /

Germany’s Finance Minister panned the Libra Association’s Dec. 1 decision to rename itself Diem, saying it was simply a “cosmetic” change, according to a Reuters report from a G7 meeting today.

“A wolf in sheep’s clothing is still a wolf,” said Olaf Scholz in a statement after a video conference in which finance ministers discussed the regulation of cryptocurrencies. “It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed.”

Those risks are high, Scholz said at the European Banking Congress in late November. While digital currencies are going to be a necessary part of a modernized banking system, he said “I do not support private-sector digital currencies.”

Speaking on Dec. 7, he added, “We must do everything possible to make sure the currency monopoly remains in the hands of states.”

This drew a quick response from CoinShares Chief Strategy Officer Meltem Demirors on Twitter.

Quoting that line, she warned, “when someone tells you who they are, believe them. [T]his is the battle. [P]repare accordingly.”

Strong support for regulation

More broadly, there is “strong support across the G7 on the need to regulate digital currencies,” According to a U.S. Treasury Department release about Treasury Secretary Steven Mnuchin’s participation in the call. 

The Treasury Department release added that Mnuchin said the group “reiterated support” for its October 13 statement on digital payments, in which the ministers emphasized the need to regulate global stablecoins with an eye on their impact on economic policy.

That said “no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.”

That is a process that will likely take years, the group has warned, and “the bar for regulatory approval will be high,” added Bank for International Settlements’ (BIS) head of innovation hub, Benoît Coeuré, in a Nov. 12 interview.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.