“A wolf in sheep’s clothing is still a wolf,” says the German finance minister. Facebook’s stablecoin, which recently changed its name from Libra to Diem, is still failing to impress German regulators.
Criticism of the Project at the G7 Meeting
German Finance Minister Olaf Scholz expressed criticism of the project Monday after a conference between G-7 finance ministers and central bank administrators.
Scholz called Facebook’s project “a wolf in sheep’s clothing” and emphasized that changing the name would not change the basics. According to him, Facebook and Diem Association did not adequately address their legal risks. Until this is done, the German government “will not accept its entry into the market.”
Before Libra renamed itself, it had already diminished the purpose of its plans to placate regulators. Although he plans to eventually create a new currency pegged to a basket of assets, it will be a fully authorized stablecoin that will allow for easier regulation. It has been reported that the first version of Diem, which is said to be released in January 2021, will be a simple US dollar-based stablecoin.
G-7 leaders have previously made clear that they will oppose the project until it fully meets the legal, regulatory and oversight requirements. The statements did not specify which requirements will be addressed.
Scholz’s words seem to suggest that the problem is a principle. He emphasized at the conference, “We must do everything possible to keep the monopoly of money in the hands of the states.”
It appears that Diem’s refusal to give up plans to create a separate currency – even if the G-7 is backed by fiat currencies – will continue to create regulatory winds for the project.