Facebook ‘cannot go forward’ with digital currency Libra until it addresses privacy and money laundering concerns: US Fed chief Jerome Powell
- Powell said the digital currency project raised ‘serious concerns’ for regulators over privacy, money laundering, consumer protection and financial stability
- The US Fed has established a working group to follow the project and is coordinating with other central banks across the globe, he added
The strong comments from the head of the US central bank, the country’s top financial regulator, adds to misgivings about the project, which has already produced strong scepticism among top policymakers across the globe.
“I don’t think that the project can go forward … without there being broad satisfaction with the way the company has addressed money laundering; all of those things,” Powell said in an appearance before the US House of Representatives Financial Services Committee.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” he told the committee. “These are concerns that should be thoroughly and publicly addressed.”
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Powell said any regulatory review of the recently announced project should be “patient and careful”.
He 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 the US Financial Stability Oversight Council, a panel of financial regulators, will also review the idea.
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.
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“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”.
Earlier in July, China’s central bank warned Libra must be put under the oversight of monetary authorities.
Mu Changchun, deputy director of the People’s Bank of China (PBOC)’s payments department, told Bloomberg the proposed digital currency would “not be sustainable without the support and supervision of central banks”.
