September 17, 2019 / 3:19 PM / a month ago

Germany's Scholz: We cannot accept parallel currencies such as Facebook's Libra

BERLIN (Reuters) - German Finance Minister Olaf Scholz said on Tuesday policymakers could not accept the emergence of parallel currencies such as Facebook’s (FB.O) planned Libra, adding that Berlin would reject any such plans.

Facebook’s planned Libra is the most well-known of the stablecoins, a certain form of cryptocurrency backed by assets such as traditional money deposits, short-term government securities or gold.

“We cannot accept a parallel currency,” Scholz said during a panel discussion in Berlin. “You have to reject that clearly.”

The German cabinet is expected to adopt a comprehensive blockchain strategy on Wednesday which aims to boost the digital transformation of its economy but also tackle the risks stemming from such new technologies.

In its blockchain strategy, Berlin says it will liaise closely with its European and international allies to prevent stablecoins from becoming alternative currencies, according to a government document seen by Reuters.

“The Federal Government will work at European and international level to ensure that stablecoins will not become an alternative to official currencies,” the document said.

Berlin will intensify its existing dialogue with the Bundesbank, Germany’s national central bank, about digital central bank money in order to explore the current state of developments and address possible risks, the document said.

The German government also aims to propose legislation this year which would allow the introduction of blockchain-based electronic bonds, the document showed.

FILE PHOTO: German Vice Chancellor and Finance Minister Olaf Scholz looks on during the "Open Door Day" of the Federal Ministry of Finance in Berlin, Germany, August 17, 2019. REUTERS/Annegret Hilse/File Photo

France and Germany on Friday said Facebook’s Libra currency posed risks to the financial sector that could block its authorization in Europe, and backed the development of an alternative public cryptocurrency.

The criticism came as the European Central Bank said it was working on a long-term plan to launch a public digital currency that could make projects such as Libra redundant.

On Tuesday, ECB board member Francois Villeroy de Galhau said stablecoins like Facebook’s Libra highlighted gaps in rules and the media giant’s payments project faced a tough regulatory approach.

Reporting by Michael Nienaber and Christian Kraemer; Editing by Paul Carrel and David Evans

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