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Facebook and J.P. Morgan discussed the emergence of stablecoins with global central bank officials during a conference in Basel, Switzerland on Monday. Financial institutions and big technology companies including Facebook and J.P. Morgan support stable coins. Officials from the world’s largest central banks raised policy and regulatory issues during the conference. Representatives from the Libra Association, J.P. Morgan and Fnality International presented their plans about stablecoins to the Bank for International Settlements (BIS), the umbrella group for the world’s largest central banks. The Libra Association is an independent, not-for-profit consortium overseeing cryptocurrency called Libra. Facebook is one of the founding members of the consortium. The social media giant announced the cryptocurrency in June and will be available in Messenger, WhatsApp and as a standalone app next year. Facebook aims to provide basic financial services to people especially in developing countries through its subsidiary Calibra, a digital wallet that allows them to save, send and spend Libra. Therefore, Libra is considered a stablecoin. However, global regulators and lawmakers responded negatively to the company’s plan.

Stablecoins are “untested” and raises “serious risks”

In a statement, the BIS said the conference was convened by the Group of Seven working group on stable coins. Benoît Cœuré, Chair of the BIS-hosted Committee on Payments and Market Infrastructures, is the head of the working group. Agustín Carstens, General Manager of the BIS, said, “A key part of assessing new initiatives is to understand the details. A key part of assessing new initiatives is to understand the details.” On the other hand, Cœuré commented, "As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system. They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high."

Facebook’s David Marcus defends Libra

Meanwhile, David Marcus, the head of Calibra defended Facebook’s cryptocurrency initiative in a series of tweets. He explained that Libra does not threaten the monetary sovereignty of nations. Instead, “a basket strong currencies will support Libra and “there’s no new money creation.” Additionally, Marcus stated that they will “continue to engage with central banks, regulators and lawmakers” to address their concerns regarding Libra’s design and operations.

2/ Recently there's been a lot of talk about how Libra could threaten the sovereignty of Nations when it comes to money. I wanted to take the opportunity to debunk that notion.

— David Marcus (@davidmarcus) September 16, 2019

4/ Libra will be backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve.

— David Marcus (@davidmarcus) September 16, 2019

6/ We also believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable.

— David Marcus (@davidmarcus) September 16, 2019

8/ Separately, I'm looking forward to the Libra Association taking on full leadership of the project soon after its charter has been ratified so I can focus on building @calibra.

— David Marcus (@davidmarcus) September 16, 2019