The EU countries do not want to allow digital currencies from private companies such as the planned Facebook currency Libra for the time being. First, the legal, regulatory and supervisory risks they pose must be identified and addressed. This was announced by the EU finance ministers after consultations in Brussels.
In Germany, Finance Minister Olaf Scholz (SPD) had already taken a clear position against such digital currencies. In his view, they could endanger financial stability. In addition, currencies should remain the responsibility of the state.
Experts believe that the US internet company Facebook, with its approximately 2.5 billion users, could stir up the global financial system with Libra. In contrast to the leading cyber currency to date, Bitcoin, Libra is supposed to be a stablecoin that is oriented to a basket of currencies and thus less susceptible to fluctuations.
Digital Euro demanded
Digital money could make money transfers across national borders much faster and cheaper. In Germany, this was one of the reasons why associations recently called for a digital euro from the European Central Bank (ECB).
The EU finance ministers also announced that they could envisage EU regulations on the regulation of stablecoins and other cryptocurrencies as part of a global approach. According to Finance Commissioner Valdis Dombrovskis, the EU Commission is already working on a regulation.
After their deliberations, the EU finance ministers also commented positively on the ECB’s work on possible state digital money. In a central bank document presented to the ministers, the euro watchdogs had argued that the issue of a digital currency based at the ECB could become necessary if cross-border payments in the EU remained too expensive.
Joint unit for combating money laundering
At the meeting of the EU finance ministers, the countries also agreed to create a body in the EU to combat money laundering across borders. They want to commission the EU Commission to prepare a corresponding draft law. According to this, the monitoring of money flows, which is currently mainly the responsibility of national control authorities, could be transferred to a Union institution.
According to a joint position paper by Germany, France, Spain, Italy, the Netherlands and Latvia in mid-November, either a new EU authority or an independent committee could be created within the European Banking Authority (EBA) for this purpose. The paper also calls for the harmonisation of anti-money laundering legislation in the EU countries. To this end, the EU Money Laundering Directive could be converted into a regulation.
Money laundering scandals in Europe have been accumulating in recent years. Financial institutions such as Danske Bank, ING and Deutsche Bank were involved. In this context, the EU Commission had pointed out “a number of weaknesses in banks, competent authorities and supervisory bodies as well as in cooperation within the EU”.
Once again, the finance ministers of the euro zone failed to achieve a breakthrough in the planned further development of the monetary union. There had been no final decision on the planned reform of the European Stability Mechanism (ESM), said Eurogroup head Mário Centeno. The main reason was scepticism from Italy. The same applies to Scholz’s proposed path towards a European deposit guarantee.