Facebook discussed launch of cryptocurrency Libra with the Fed

Federal Reserve Chairman Jerome Powell said on Wednesday that Facebook spoke to the central bank about the digital currency called Libra that the tech giant is helping create.

“Facebook, I believe, has made quite broad rounds around the world with regulators, supervisors and lots of people to discuss their plans and that certainly includes us,” Powell said.

Libra is a digital currency, also known as a cryptocurrency, that is intended to transform how money moves around the world. Facebook announced on Monday that it is leading a group of payments and technology companies – including Visa, MasterCard, PayPal, eBay, Lyft and Uber – to create Libra, set to launch in the first half of next year.

Powell noted that the Fed meets “with a broad range of financial sector firms all the time on financial technology.”

“There’s just a tremendous amount of innovation going on out there,” Powell said.

Although Libra intends to solve some issues that cryptocurrencies face, Powell also identified that Facebook’s group will also likely must overcome other issues before Libra becomes used around the world.

“There are potential benefits here; there are also potential risks, particularly of a currency that could potentially have large application,” Powell said. “We will wind up having quite high expectations from a safety and soundness and regulatory standpoint if they do decide to move forward with something.”

Powell noted that the Fed does not have “plenary authority” over cryptocurrencies like Libra. Instead, Powell said the central bank instead may have influence over the widespread adoption of cryptocurrency “through international forums” because the Fed has “significant input into the payment system.”