Print Magazine
Brussels Morning Newspaper
Monday, June 27, 2022
No Result
View All Result
  • Home
    • About Us
  • EU institutions
    • Commission
    • Parliament
    • Council
  • Europe
  • World
  • Economy
  • Culture and Society
  • In Depth
    • Ambassador’s Corner
    • The American Angle
    • Europe With Transparency
    • Sustainable Perspective
    • Place de la Bourse
    • The Macro-Economist
    • Southeast Europe
Brussels Morning Newspaper
  • Home
    • About Us
  • EU institutions
    • Commission
    • Parliament
    • Council
  • Europe
  • World
  • Economy
  • Culture and Society
  • In Depth
    • Ambassador’s Corner
    • The American Angle
    • Europe With Transparency
    • Sustainable Perspective
    • Place de la Bourse
    • The Macro-Economist
    • Southeast Europe
Brussels Morning Newspaper
No Result
View All Result
Home Opinion

The EU must face Diem with a regulatory bulwark

Stefan Berger MEP by Stefan Berger MEP
5 March 2021
in Opinion
The EU must face Diem with a regulatory bulwark
Share on FacebookShare on Twitter

In the fast evolving world of crypto-markets, European regulation is ever more urgent — Facebook’s Diem will speed up progress, writes Stefan Berger MEP.

Brussels (Brussels Morning) Stablecoins have become the subject of heated political and economic debates after Facebook and its partners announced an issuance of their own global stablecoin, Diem. European authorities are required to respond: no stablecoin project should begin operation in the EU until the relevant actors have addressed the  legal, regulatory and oversight challenges and risks associated with the coin. The European Central Bank should have the final say on stablecoin regulation.

Crypto-assets are continuously evolving. The World Economic Forum recently published analyses saying that by 2029, approximately 10 trillion dollars will be tokenised by the help of the blockchain. It was Facebook’s announcement to introduce its own digital currency called “Diem” that has unlocked the stablecoin era in the financial world. Mark Zuckerberg’s initial concept was first presented in 2019 and aimed to create a single global

currency, formerly known as ‘Libra’. Pegged to a basket of national currencies and bonds,

Diem was supposed to be used in a new word wide blockchain network. In contrast to Bitcoins, stablecoins such as Diem rely on a set of stabilisation tools which minimise fluctuations and qualify them as currencies. The idea behind Diem is that money should be sent as easily and quickly across the world as text messages. According to Facebook, in particular, underbanked and unbanked regions of the world would achieve access to the financial system and become part of a worldwide unified financial ecosystem. A Switzerland-based consortium, the so-called Diem Association including companies such as Uber, Coinbase, Spotify and others, will be responsible for the governance of the Diem network and monitor the development of the Diem project.

Severe regulatory pressure, however, made Facebook alter its plans. In order to address public and political concerns, instead of only one single coin linked to multiple currencies, the Diem project was modified to offer multiple coins that would each be backed by a different national currency. Furthermore, Diem considers itself a partner for central bank digital currencies rather than a rival allowing financial institutions to connect to the Diem network to facilitate transactions.

Diem, a wolf in sheep’s clothing

The flip side of stablecoins such as Diem is the host of risks they can pose to our social and economic life. Since its public announcement, Facebook’s currency has frequently been confronted with regulators’ warnings of Diem being potentially abused as an instrument money laundering and terrorism financing.

A cryptocurrency launched and controlled by a giant tech company that has a history of questionable practices such as Cambridge Analytica scandals raises concerns when it comes to the protection of data and privacy. A private currency project bringing together the dominance over date with the power of money not only bears privacy concerns for its users but also threatens the stability of traditional government-run financial systems.

Not to forget that Facebook is the most popular social media network worldwide with more than 2.7 billion monthly active users. And as Facebook’s members are also potential Diem users, Facebook, or respectively the Diem Association, could achieve the status of a Central Bank overnight, backed by a trillion-dollar reserve.

Strengthening the role of the European Central Bank

Currently, the crypto-asset market does not pose a threat to financial stability. But this may change with the introduction of global stablecoins like Diem. Therefore, Europe needs a regulatory and oversight framework.

Initially, the EU-Commission had proposed that relevant authorities such as the European Central bank should provide non-binding opinions with regard to the introduction of new crypto currencies. Nevertheless, it is the right step to equip them with more powers to take an active role during the authorisation procedure of a new crypto currency.

More precisely, the authorisation of stablecoins must depend on the ECB’s monetary policy consideration, which has been proposed in the first draft of the current Markets in Crypto-Assets report.

Diem’s launch day is unknown. Yet, it is clear that currency monopoly belongs in the hands of states, not in the hands of a private company.

Tags: Brussels DirectMain-SliderMEP

Latest post

Mont,De,Marsan,Landes,France,05,17,2019,Eurofighter,Typhoon

German MTU hopes for new contracts in Luftwaffe overhaul

2 days ago
Flags,Of,Moldova,European,Union,And,Ukraine

Supporting Moldova means supporting stability in Ukraine

3 days ago

Most Read

  • These are the 10 highest paying jobs in the Europe in 2022

    These are the 10 highest paying jobs in the Europe in 2022

    0 shares
    Share 0 Tweet 0
  • What Are The Highest Paying Jobs In Luxembourg?

    0 shares
    Share 0 Tweet 0
  • Energy Recovery Fund

    0 shares
    Share 0 Tweet 0
  • What Are The Highest Paying Jobs In Finland?

    0 shares
    Share 0 Tweet 0
  • A taste of Croatian flavors of the diplomacy in Brussels

    0 shares
    Share 0 Tweet 0
Facebook Twitter Youtube LinkedIn

About Us

Brussels Morning is a daily online newspaper based in Belgium. BM publishes unique and independent coverage on international and European affairs. With a Europe-wide perspective, BM covers policies and politics of the EU, significant Member State developments, and looks at the international agenda with a European perspective.

Category

  • Ambassador’s Corner
  • Belgium News
  • Brussels
  • Commission
  • Council
  • Culture and Society
  • Diplomacy
  • Economy
  • EU Institutions
  • Europe
  • Europe With Transparency
  • Features
  • In Depth
  • Member States
  • Middle East Eye
  • Opinion
  • Our pick
  • Parliament
  • Place de la Bourse
  • Southeast Europe
  • Sustainable Perspective
  • The American Angle
  • The Macro-Economist
  • Uncategorised
  • US Elections
  • World

More info

  • About Us
  • Advertising
  • Cookies Policy
  • Contact Us
  • FAQ
  • Jobs

Brussels Morning Newspaper - All Rights Reserved © 2020

No Result
View All Result
  • Home
  • About Us
  • EU Institutions
    • Parliament
    • Commission
    • Council
  • Europe
  • World
  • Member States
  • Economy
  • Culture and Society
  • In Depth
    • Ambassador’s Corner
    • Europe With Transparency
    • Place de la Bourse
    • The Macro-Economist
    • Sustainable Perspective
    • The American Angle
    • Southeast Europe
  • Print Magazine

Brussels Morning Newspaper - All Rights Reserved © 2020

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT