Fed Boss Calls On Facebook To Halt Libra Digital Currency

Facebook is facing growing pressure to halt its Libra cryptocurrency project, after an intervention by a senior US official.

The chairman of the US Federal Reserve, Jerome Powell, said on Wednesday that Facebook’s plan “cannot go forward” until serious concerns are addressed.

Facebook is already regulatory concerns about the project, and earlier this week major banks in the US and Europe have voiced scepticism about the scheme.

Facebook Libra

Indeed, no banks were present amongst Libra’s dozens of initial backers when the project launched last month, although Facebook said it is in talks with banks and expects banks to have joined the Libra Association by the time the project launches next year.

The association’s founding members do however include Visa, MasterCard and PayPal.

But now Facebook is facing calls for a halt on the project.

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell was quoted by Reuters as saying during his semi-annual testimony on monetary policy before the US House of Representatives Financial Services Committee.

“I don’t think the project can go forward” without addressing those concerns, he added later.

Powell also reportedly said any regulatory review of the project should be “patient and careful.” He noted that existing rules do not fit digital currencies.

“It’s something that doesn’t fit neatly or easily within our regulatory scheme but it does have potentially systemic scale,” Reuters quoted he as saying. “It needs a careful look, so I strongly believe we all need to be taking our time with this.”

Facebook however said it agreed with the Federal Reserve chairman about the need for a public debate on the matter.

“We are very much aligned with the Chairman around the need for public discourse on this,” Facebook spokeswoman Elka Looks was quoted by Reuters as writing in an email. “This is why we along with the 27 other Founding Members of the Libra Association made this announcement so far in advance, so that we could engage in constructive discourse on this and get feedback.”

Disruption risk

\Whatever Facebook’s public comments on the project, it is clear that regulators and central banks have voiced concerns about Libra.

Last weekend for example a senior official from China’s central bank spoke out about the potential issues with the project.

Mu Changchun, deputy director of the People’s Bank of China’s payments department, told the Caixin news agency that Libra showed promise as a global currency but also risked disrupting monetary policy and could cause foreign exchange risks in economies with a volatile local currency.

Facebook hadn’t yet made clear its commitment to anti-money laundering, transparency and data protection requirements, Mu said.

Quiz: Think you know all about Facebook?

Tom Jowitt @TJowitt

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Recent Posts

BT To Charge Customers Who Keep Old Routers

When contracts end, BT will charge customers up to £50 if they keep their old routers in an effort to…

7 hours ago

Europe To Allow Member States To Make Own Huawei 5G Decision

More bad news for the United States, as European Union follows Britain's lead in resisting US pressure to ban Chinese…

7 hours ago

Facebook Oversight Board Appoints Human Rights Expert

Can independent oversight board restore faith in Facebook's and Mark Zuckerberg's handling of questionable content?

8 hours ago

Ring Doorbell App Reveals Personal Data, EFF Warns

Privacy threat? Ring app for Android is packed with third-party tracking software, Electronic Frontier Foundation has warned

11 hours ago

FinTech Part 1: A New Payments and Banking Landscape

As one of the fastest-growing sectors, FinTech is building technologies and services that will touch every consumer and business. In…

11 hours ago

Apple Pleases With Strong Sales Of iPhone 11

Strong growth at Apple propels its market valuation close to $1.4 trillion amid buoyant iPhone sales, even in China

12 hours ago