Federal Reserve: “Libra needs to solve some problems”
Regulation

Federal Reserve: “Libra needs to solve some problems”

By Marco Cavicchioli - 11 Jul 2019

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According to the governor of the Federal Reserve, the Libra project would need to solve some serious problems before it could proceed. 

Jerome Powell revealed this at a hearing at the US Congress’ Financial Services Committee, chaired by Maxine Waters. 

To an explicit question from the President of the Commission, Mr Powell replied as follows: 

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability. These are concerns that should be thoroughly and publicly addressed before proceeding”.

Waters had expressed some concerns about Libra, so during the hearing, he asked Governor Powell some questions about the Fed’s attitude towards this project. 

Powell confirmed that meetings took place between some Fed officials and Facebook spokespeople before the company published the whitepaper and that the central bank investigated the issue. The governor also suggested that other public agencies, such as the Financial Stability Oversight Council (FSOC), will address these concerns seriously.

To another question, coming from the Republican representative of North Carolina Patrick McHenry, Powell answered: 

“If there were problems there associated with money laundering or terrorist financing — any of the things we’re all focused on, including the company — they would arise to systemically important levels just because of the mere size of the Facebook network”. 

Finally, Powell said that the Federal Reserve does not want to discourage financial innovation, but wants it to happen in a safe and sound way”.

The former Governor of the People’s Bank of China (PBoC), Xiaochuan Zhou, also spoke on Libra. 

cnLedger reveals how Zhou hopes that China will take precautions in this regard, because in the future an internationalised and globalised currency may emerge, one so strong that it will allow the main currencies to establish exchange rate relations with it. 

According to Zhou, this global currency is not necessarily Libra, but he certainly referred in particular to the Facebook cryptocurrency project. 

What the former PBoC Governor suggests is that China should look for solutions to the problem that Libra could cause if it were to spread internationally, namely the dollarisation of the global monetary sector, to maintain its strong monetary status. It is likely that he was referring to the project of the same POoC to create its own cryptocurrency. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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