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Facebook's Libra project is being attacked from all angles, and Fed chairman voices serious concerns

Federal Reserve Chairman Jerome Powell at a House Financial Services Committee meeting on October 10, 2019 July 2019.
Photo: Susan Walsh (AP)

Facebook's already troubled Libra cryptocurrency project, which has already met with significant opposition from the US House Committee on Financial Services and the Senate Banking Committee, will hit on Wednesday further resistance of the supervisory authorities.

Wired US Federal Reserve Chairman Jerome Powell told the House Committee that he has "many serious concerns" about Facebook's funding for data protection, money laundering, consumer protection and global financial stability. He added that "the process of addressing these concerns should be a patient and cautious process, not a sprint," and that the Fed should work with other agencies and their foreign central banks to understand the potential impact of Libra.

Powell's colleagues in other countries express similar concerns about the project, in particular because they would rely on a Swiss-based association to manage the Libra platform and monitor its reserve fund, "a global financial network Outside the usual central framework, banks such as the Fed operate. "(Facebook works with dozens of partner companies, each receiving one percent of the votes in the association, although this is by far the most prominent in its extensive social network, due to plans to integrate balance payments through the Wallet Service Calibra.)

Wired writes:

Powell's concern follows similar comments from top regulators in Europe and As ia. On Sunday, Benoît Cœuré, a senior executive at the European Central Bank, described Libra as a "wake-up call" to regulators, saying it could not operate in a "void" outside the typical structure of central banks.

Powell also confirmed that he had met representatives of Facebook in the months leading up to the Libra announcement, which was part of the technology company's global tour of talks with tax authorities. Apparently, many regulators left these meetings unsatisfied. Outside the EU, regulators in the UK, Japan and Singapore have called for more in-depth testing of the balance in recent weeks.

Earlier this week, Facebook announced that it had no plans to provide wallet services for Calibra in India, which authorities prohibit banks. Handling cryptocurrencies in the past year and reports have shown that a full ban may be implemented. Indian Economy Minister Subhash Garg told Bloomberg this week that the design of the Facebook currency has not been fully explained. But whatever it is, it would be a private cryptocurrency, and we were not satisfied with that. "

Facebook has hundreds of millions of users in India, for whom the World Bank is the world leader in referrals Failure to make a serious blow to its global financial ambitions there.

Facebook is not active in China, although Bloomberg recently reported that officials of the People's Bank of China (PBC, the central bank of the country) expressed concerns about the impact of Libra on lending, monetary policy and "currency risks in economies with a volatile local Currency, ie people who are massively switching from the local currency to the balance. According to the Bloomberg report, Ms. Changchun, PBC Deputy Payments Director, stated that Facebook has not yet explained how it deals with users' privacy, money laundering or terrorism concerns, and that the cryptocurrency must be regulated by the monetary authorities.

Representative Maxine Waters, who had called for a moratorium on the development of Libra until his concerns were cleared up, also asked Powell if Facebook could emerge as a financial institution at the Wired hearing, which according to the Dodd-Frank Financial Reform Act be great to fail reports. Powell replied that this is not yet clear, although regulators are investigating the problem.

Facebook co-founder Chris Hughes, who has since become an outspoken critic of the company's massive power, recently warned the Financial Times that "The Libra Association's goals explicitly state that capability is decentralized forms of" In other words, the Libra will disrupt and weaken nation states by allowing people to move from volatile local currencies into a dollar-denominated and managed currency. " of companies. "

According to CNBC, increasing pressure on industry has led to growing skepticism that the Libra project will actually get underway by its planned launch date in the first half of 2020:

Successful launch of Libra and Calibra, Facebook, has to overcome numerous financial regulations to combat money laundering, money transfer, securities and privacy, said Charle y Moore, CEO of Rocket Lawyer, a San Francisco-based company providing online legal services. All of these rules should also be respected by Facebook, as they vary from region to region, said Nayar.

"In the US alone, they can vary by city, state, and state," he said. "Given the reach of Facebook and the big aspirations of the new Facebook medal, it's difficult to predict which area is the biggest challenge for them."

The control of their countries' currency and banking systems was blocked by tentacles, "said early Facebook investor Matt Ocko to CNBC. "I hope to God that enlightened regulators will kill this thing on the heels."

At the request for a comment from Facebook, Wired wrote, the company referred them to a letter from Calibra boss David Marcus to skeptical senators as said, it agreed with Powell's demand for a "patient and cautious" approach to the Start of the Libra project too.


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