Japan has set up a task force to review and assess the impact of Facebook’s Libra on the economy. The working group will consist of the Bank of Japan, the Ministry of Finance and Financial Services Agency, reuters reports.
According to a recent reuters report, Japan will begin investigating the possibility of Libra as an alternative currency for criminal activity such as money laundering. They will also look into the possible negative impact on the fiat economy. They will assess the different ways in which regulations, monetary policy, tax and payment settlements can be implemented on cryptocurrencies.
The task force is comprised of the Bank of Japan, the Ministry of Finance and the Financial Services Agency. Facebook’s stablecoin called Libra is the main target of investigation because it may reach a higher market saturation than any other alternative currency on the market. The multinational reach of Facebook, along with its massive influence on the internet, may push for a larger adoption of the cryptocurrency. Japan taskforce reviews Libra to implement anti-money laundering.
Task Force Japan
The Japanese Task force comes after the announcement of a G7 Task Force. France, the current leader of the G7 countries, announced that it will be setting up a Task Force comprised of all member nations and international monetary organisations, to study the impact of cryptocurrencies, especially Libra. Countries all over the world are increasing sounding alarm bells over cryptocurrencies because Facebook has entered the cryptocurrency market.
The possible reach of Facebook could make Libra a household name, potentially disrupting the fiat based economies. Countries are afraid that Libra could destabilize the current market landscape, putting a lot of local players out of business. Facebook, currently, has expanded its social media platform to include a marketplace for the sale of software and services based on the Facebook Platform. With the introduction of Libra, countries are afraid that Facebook may disrupt brick-and-mortar shops by offering services online with Libra as a currency.
Facebook has stated in a white paper released on their website that Libra will be a Stablecoin connected to a fiat currency, in this case, the dollar. This will protect it from wild fluctuations which is one of the primary concerns of governments worldwide. The currency will also be regulated by a central authority which will allow for partners to be attached. The partners will be able to enable transactions after getting authorization. Facebook is currently allowing only paying partners although it has announced that it will be opening it to all after a certain point.
Benoit Coeure, a board member of the European Central Bank, will be presenting his report on Libra to the G7 finance ministers in a weeks time in France. This will possibly influence the future reports as well as the upcoming G20 summit. Japan hopes to get as many nations on board so that a more uniform policy on cryptocurrencies may be employed. They hope that this systematic policy may curb the possible misuse of cryptocurrency leading to better adoption worldwide.
The Financial Services Agency oversees the banking regulation in Japan, unlike other countries where the Central Bank performs the function. Japan taskforce reviews Libra via a multi-governmental task force.
Japan and G20
Japan will head the G20 summit this year. The task force findings may influence the final outcome of the G20 policy on cryptocurrency.
In Japan, the central bank does not oversee banking regulation, which is handled by the Financial Services Agency.
As this year’s chair of the bigger G20 group of major economies, Japan will also look at ways to align efforts made separately by the G7 and G20 to address the policy implications of Libra, the officials said.