Federal Reserve Chairman Jerome Powell revealed that Facebook has spoken to the central bank about its upcoming cryptocurrency, called Libra.
“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 on Wednesday (June 19), according to CNBC.
Libra is designed to be a stablecoin, pegged to the value of government-issued currencies. It reportedly has already found backing from over a dozen companies, including Visa, Mastercard, PayPal Holdings and Uber Technologies on it. Every contributing firm or venture capitalist taking part in the project will invest about $10 million in a consortium that will be used to govern the Libra coin. The funds will be used to pay for the creation of the coin itself, which is set to launch in the first half of next year.
Powell added 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,” he said.
Earlier this week, Congresswoman Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, called for a moratorium on the digital currency.
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” she said. “The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers, and the economy. Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies. Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action. Facebook executives should also come before the Committee to provide testimony on these issues.”
But Powell believes the social media giant will overcome any issues before Libra is launched.
“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.”