Libra is a “stablecoin” designed by the Libra Association, which includes Calibra, Uber and Facebook subsidiary Spotify.
Stablecoins differ from other cryptocurrencies in that they are backed by a reserve of assets; in this case, a basket of bank deposits and short-term government securities denominated in various national currencies. The goal is to avoid the type of volatility that sent the price of Bitcoin on a roller coaster ride.
But the RBA is skeptical about the legality of Libra.
“In October, the G7 released a report on global stablecoins in which it recognized that they have the potential to be more efficient and more inclusive than existing payment methods, particularly for cross-border payments,” wrote the RBA in its submission to the Select Senate. Committee on Financial Technology and Regulatory Technology.
“However, the G7 also noted that such proposals raise significant legal and regulatory risks, including for consumer/investor protection, data privacy, monetary policy and financial stability. »
“As a result, he warned that global private sector stablecoin initiatives should not be allowed to launch until all risks and regulatory requirements have been addressed. The bank supports this view.
This is a rare departure for the RBA, which has supported a number of initiatives to further digitalise Australia’s economy.
The RBA also questioned whether Australians would actually use the stablecoin if it came to the country.
“In Australia, it is not clear that there will be strong demand for global stablecoins, even if they meet all regulatory requirements, particularly for domestic payments,” the report said.
“Australia is already well served by a range of low-cost and efficient real-time payment methods, such as NPP, which use funds held in accounts with prudentially supervised financial institutions.”
“Furthermore, while Australians may not have been well served by banks providing cross-border payment services in the past, a number of new non-bank digital players have entered the market in recent years, offering significantly cheaper and faster money transfer services.”
