Mark Carney: Facebook’s Libra must be “solid” from start

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Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO of FXcompared and has 18 years of experience in the international finance world focusing on cross-border payments, technology and the property sectors. Daniel is widely… Read more
  • Bank of England’s Governor launches attack on cryptocurrency payment system backed by Facebook, Visa and others
  • “This is not learning on the job stuff, it’s got to be rock solid right from the start or it’s not going to start”, he argued
  • Carney not the first to join the chorus against Libra – Donald Trump, Bank of France Governor and others have all expressed reservations

 

The Governor of the Bank of England has released a strong warning about Facebook’s planned cryptocurrency ahead of its launch.

Mark Carney said that Libra, which is a planned crypto coin and online money transfer system operated by Facebook and backed by large names in the finance world such as Andreessen Horowitz and Visa, could be risky.

He said that the nature of a system like Libra would mean people would rely on it – and argued that this would lead to all sorts of requirements for consumer protection.

Carney was speaking at a news conference following the release of a report last Thursday from the Bank of England, which was critical of the category in which Libra is placed.

The Financial Stability Report, which comes out once every six months, said that so-called “stablecoins” had not yet had the chance to properly prove themselves.

“There are over 50 stablecoins on the market, and many are yet to prove that they are in fact, ‘stable’”, it said.

Stablecoins are a variety of cryptocurrency which have some element of fiat backing, such as government securities.

In his remarks, Carney pointed out that Libra would need to be tested to ensure that it was “on all the time”.

“If you are a systemic payment system, you have to be on all the time. You can’t have teething issues, you can’t have people losing money out of their wallets”, he said.

“This is not learning on the job stuff, it’s got to be rock solid right from the start or it’s not going to start”, he added.

Carney and the Bank of England are far from the first central bank leaders to have expressed worries over Libra.

The Governor of the Bank of France, Francois Villeroy de Galhau, has warned that Libra went against plans to reduce money laundering.

Warnings about Libra have come from other sources too. US President Donald Trump said it “will have little standing or dependability”.

"If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks”, he added.

The controversy surrounding it among central bankers and politicians reflects the confused position that many cryptocurrencies find themselves in.

They are often the target of ire from established political and financial leaders for a whole host of reasons – including perceived threats to the hegemony of existing systems, concerns over consumer rights, and more.

Libra is not the only exciting development to be happening in the cross-border payments space. To learn more about what’s coming up on the horizon, just take a look at our news pages.


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