Why Facebook’s digital currency ‘cannot go forward’
Jerome Powell, US Federal Reserve Chairman has said Facebook’s digital currency called Libra, that the social media giant plans to build, “cannot go forward” until serious concerns are addressed.
TheNewsGuru (TNG) reports Powell made this known on Wednesday during his semi-annual testimony on monetary policy before the US House of Representatives Financial Services Committee.
Powell said any regulatory review of the project should be “patient and careful.” He noted that existing rules do not fit digital currencies.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability. I don’t think the project can go forward.
“It’s something that doesn’t fit neatly or easily within our regulatory scheme but it does have potentially systemic scale. It needs a careful look, so I strongly believe we all need to be taking our time with this,” he said.
Facebook, alongside 27 other Founding Members of the Libra Association, recently made the announcement of preparing to step into the world of finance with the new digital currency by 2020.
The strong comments from the US financial regulator underscored the growing regulatory hurdles facing the proposed cryptocurrency, which has drawn scrutiny from policymakers globally.
Meanwhile, Powell said the Fed has established a working group to follow the project and is coordinating with other central banks across the globe.
He also expects a review from the US Financial Stability Oversight Council, a panel of regulators charged with identifying broad risks to the financial system.
Powell noted that he supports financial innovation as long as appropriate risks are identified, but he said the massive platform enjoyed by Facebook immediately sets Libra apart from other digital currency projects.
“Facebook has a couple billion-plus users, so I think you have for the first time the possibility of very broad adoption,” he said.
Any problems that could emerge through Libra “would arise to systemically important levels just because of the mere size of Facebook.”
Facebook officials are scheduled to testify about the project later this month in Congress, where senior lawmakers have raised data privacy and other concerns.