Facebook found itself facing a congress investigation shortly after it announced that it will be launching Libra, its very own digital currency. Now, the company now is facing more extra opposition from the Federal Reserve.
Federal Reserve Chairman Jerome Powell spoke on Wednesday to House lawmakers and expressed his concerns about Libra.
“While the project’s sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said when Rep. Maxine Waters asked him about the digital currency.
Powell went on to add that the entire process of addressing the concerns “should be a patient and careful one, not a sprint”. He also mentioned that the Federal Reserve is collaborating with a number of other agencies and foreign central banks in order to assess what Libra’s impact could be in the future.
Powell mentioned that he has met with Facebook representatives as early as months before the company announced Libra to the world and that a number of the regulators have left the meeting feeling ‘unsatisfied’.
His concerns have been echoed by other top regulators in both Europe and Asia. Benoît Cœuré for example, an executive at the European Central Bank said about Libra that “It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now.”
Cœuré went on to add that digital currencies expose not only the inadequacies in the current regulations but also the way the banking system has failed to embrace new technology.
“All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things,” he stated.