Date
21 October 2019
G7 finance ministers and central bank governors pose for a group photo during a meeting in Chantilly, near Paris. Credit: Reuters
G7 finance ministers and central bank governors pose for a group photo during a meeting in Chantilly, near Paris. Credit: Reuters

G7 urges tough Libra regulation, agrees to tax digital giants

Digital currencies such as Facebook’s planned Libra raise serious concerns and must be regulated as tightly as possible to ensure they do not upset the world’s financial system, Group of Seven finance ministers and central bankers said on Thursday, Reuters reports.

Finance Minister Bruno Le Maire of France, which holds the rotating presidency of the G7 top world economies, told a news conference that the group opposes the idea that companies could have the same privilege as nations in creating means of payment – but without the control and obligations that go with it.

“We cannot accept private companies issuing their own currencies without democratic control,” Le Maire said.

In a summary of the informal G7 talks in Chantilly, north of Paris, the French presidency said the ministers and governors had agreed that “stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns”.

The G7 finance chiefs are concerned that Facebook’s ambitions for a digital currency might not only weaken their control over monetary and banking policies but also pose security risks.

“A global stablecoin for retail purposes could provide for faster and cheaper remittances, spur competition for payments and thus lower costs, and support greater financial inclusion,” European Central Bank board member Benoit Coeure, the chairman of the taskforce, told the G7 meeting.

“However … they give rise to a number of risks related to public policy priorities including anti-money laundering and countering the financing of terrorism, consumer and data protection, cyber resilience, fair competition and tax compliance.”

In other decisions, the G7 agreed that large tech companies such as Google, Amazon, Facebook or Apple can be taxed in the countries in which they make money, even without being physically present there, Reuters reported.

They also agreed that there should be a minimum level of tax to discourage countries from competing in a “race to the bottom” to attract business from digital multinationals, the report said.

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