Facebook's Libra cryptocurrency should not continue until the company has proven it is safe and sound, according to a report by the world's largest economy.
In a blow to the social media giant, a report by the G7 group of countries warns that currencies like Libra pose a threat to the global financial system.
The draft report outlines nine major risks posed by digital currencies. .
The warning comes just days after the giant payments Mastercard and Visa were issued from the Libra project, citing regulatory uncertainty.
The G7 taskforce that issued the report includes senior officials from central banks, the International Monetary Fund (IMF) and the Financial Stability Board, which formulate policies for the G20 economies.
It says proponents of digital currencies like Libra should be legally secure, protect consumers and secure coins. is not used in the distribution of money or terrorism funds.
While the report, which was to be presented to the finance ministers at the IMF's annual meeting this week, was not alone in Libra, it said "global stablecoins" with the potential to "scale fast" would cause a scope of potential problems.
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Stablecoins like Libra are different from other cryptocurrencies, such as Bitcoin, because they are pegged to be established. currencies such as dollars and euros.
While it was designed to limit large swings to their value, the report said that global cryptocurrencies like Libra could cause problems, including for policy-makers sets interest rates.
The report also warned that Libra could jeopardize competition with other providers and even threaten financial stability if users suddenly suffered a "loss of trust" in digital currency.
The draft report states: "The G7 believes that no stablecoin project should commence operations until legal, regulatory and management challenges and risks are met".
It also raises doubts about the viability of the project even though Libra & # 39; s Supporters are appealing to concerns raised by governments and central banks.
"Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin repair," the report stated. 19659007] A separate FSB report, published on Sunday, warned that the introduction of "global stablecoins" poses a challenge to regulatory regulations. that these challenges "should be evaluated and addressed as a priority".
The FSB is working with officials around the world to identify potential regulatory gaps, and wil l publish a report next summer.
Facebook has warned that regulatory considerations could delay or even hinder the launch of Libra.
Libra is not the only digital currency facing investigation.
The JPM Coin of JPM, supported by the US dollar, is a stablecoin that is also likely to be noted.
& # 39; The Development of Pressure & # 39;
The Libra Association, together with Facebook, will hold its first board meeting in Geneva on Monday.
As well as Mastercard and Visa, Stripe, eBay and Paypal also withdrew the scheme, which is also supported by ride-hailing companies Uber and Lyft.
The G7 report acknowledges that cryptocurrencies can provide a faster and cheaper way to transfer money and make payments and says the current system is often "slow, expensive and messy".
There are currently 1.7 billion underpaid and worthless consumers who could benefit from greater access to financial services, it added.
A spokesman for the Libra Association declined. to comment. A G7 spokesman could not be reached for comment.
However, the Facebook executive in charge of the Libra project said earlier this month that the loss of the backing of the major companies was "liberating". David Marcus added: "You know you're in for something when so much pressure builds up."