Facebook Meets With Global Regulators Over Libra Concerns

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Twenty-six central banks to grill Facebook on plans for Libra cryptocurrency as concern mounts over potential threat to monetary stability

Representatives of Facebook’s Libra cryptocurrency project are to meet with global regulators on Monday in the first major contact of its kind since Facebook announced the project in June.

Libra representatives are to meet in Basel with officials from 26 central banks, including the Federal Reserve and the Bank of England, the Financial Times reported, citing unnamed officials.

Benoît Coeuré of the European Central Bank is to chair the meeting between the officials, who form the Committee on Payments and Market Infrastructure, part of the Basel-based Bank of International Settlements (BIS), and the Libra Association.

Coeuré is amongst the officials to have cautioned against Libra’s potential to cause monetary disruption, saying recently that the “bar for regulatory approval will be very high” for Libra to operate in the EU.

Probe

Facebook and Libra’s other founders are to be queried about the asset’s scope and design as part of a report being prepared for G7 finance ministers in October, an official told the FT.

The Libra Association said it welcomed talks with regulators.

“In the nearly three months since the intent to launch the Libra network was announced, we have prioritised engagement with regulators and policymakers around the world,” the group said in a statement.

“We welcome this engagement and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.”

Some major banks have faulted Facebook for failing to gain regulatory backing before officially announcing Libra.

The BIS declined to comment.

Stability threat?

Libra immediately drew the attention of regulators and lawmakers, with the US Congress grilling Facebook’s head of cryptocurrency on the project in July.

In Europe, French finance minister Bruno Le Maire has warned Libra threatens governments’ “monetary sovereignty”, and said that under current conditions “we should refuse the development of Libra in the EU”.

France, which holds the rotating presidency of the G7, has assembled a taskforce to probe Libra and other stable asset-backed cryptocurrencies, which is also chaired by Coeuré.

The Basel-based Financial Stability Board has also said it will look into Facebook’s Libra plans, while the European Commission has sent out questionnaires on the project that may lead to a formal antitrust probe.

However, Coeré also acknowledged that Libra has been a “wake-up call” prompting governments and central banks to work to make consumer payments “faster and cheaper”.

He backed central banks’ plans to develop a digital currency of their own, saying it was time to “step up our thinking on a central bank digital currency”.

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