A day after Congresswoman Maxine Waters (D-CA), Chairwoman of the U.S. House Committee on Financial Services, made a statement in which she asked Facebook executives “to come before the Committee to provide testimony” regarding its proposed cryptocurrency (Libra), the U.S. Senate Banking Committee announced that it had scheduled a hearing to discuss the same topic.
On Tuesday (June 18), Facebook announced that it is creating a new “low-volatility” cryptocurrency (a fully fiat-collateralized stablecoin) called Libra (LBR), built-on top of a permissioned but public blockchain called Libra Blockchain. It also said that one of its subsidiaries (called Calibra) is building a wallet (called Calibra) that will let you “save, send and spend Libra”.
Reaction by the French Finance Minister
Within a few hours, the French Finance Minister, Bruno Le Maire, said during an interview on Europe 1 radio that “it is out of the question” for Libra to “become a sovereign currency”:
“It can’t and it must not happen.”
According to Bloomberg, Le Maire “called on the Group of Seven central bank governors, guardians of the global monetary system, to prepare a report on Facebook’s project for their July meeting.”
Reaction of the Bank of England Governor
Roughly around the same time, at the European Central Bank’s annual symposium in Sintra, Portugal, Bank of England Governor Mark Carney talked about Libra:
“Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation.”
Congresswoman Maxine Water’s Statement on Facebook’s Cryptocurrency Announcement
“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.”
Reaction of the U.S. Federal Reserve Chairman
According to Coindesk, earlier today (June 19), Jerome Powell, the Chairman of the U.S. Federal Reserve, said during a press conference that Facebook had had preliminary talks with Fed officials before yesterday’s Libra announcement:
“You know 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 did not seem too worried about cryptocurrencies, perhaps because he knows that there is a huge regulatory mountain for Facebook to climb before it can launch Libra:
“So essentially…not too concerned about the central banks no longer being able to carry out monetary policy because of cryptocurrencies or digital currencies…
You know, there are potential benefits here, there are also potential risks, particularly of a currency that could, you know, have large application. So I would echo what Governor Carney said which is that we will wind up having quite high expectations from a safety and soundness and regulatory standpoint if they do decide to go forward with something.”
The U.S. Senate Banking Committee
Also, today (June 19), the U.S. Senate Banking Committee announced that it will hold a hearing (“Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations”) on July 16 to discuss Libra. No witnesses have been announced yet. According to Reuters, a source in Washington familiar with the matter has said that David Marcus, Co-Creator of Libra, is expected to testify.
This is the same Committee that wrote an open letter on May 9 to Mark Zuckerberg, Founder, Chairman, and CEO of Facebook, in order to get answers to seven questions about Facebook’s proposed crypto-based global payments system.
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