Wednesday Jul 10 2019

Facebook digital currency plan raises 'serious concerns': US Fed chief

Small toy figures are seen on representations of virtual currency in front of the Libra logo in this illustration picture, June 21, 2019.—Reuters/File Photo

WASHINGTON: US Federal Reserve Chairman Jerome Powell said on Wednesday that Facebook’s plan to build a digital currency called Libra “cannot go forward” until serious concerns were addressed.

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 skepticism 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.

Powell said the digital currency project, announced by the social media giant in June, raised “serious concerns” for regulators.

"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."

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.

"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."