The US Federal Reserve Chairman Jerome Powell spoke out on Facebook’s planned cryptocurrency recently. He said that the expectations are high, both from a consumer protection standpoint and from a regulatory standpoint.
According to US Federal Reserve Chairman Jerome Powell, Facebook’s Libra will be subject to very high standards. In comments made on Tuesday, the cryptocurrency has yet to prove itself to the central bank. Due to the massive scale of its undertaking, the Federal Reserve will be taking a close look at it. “We’re looking at it very carefully,” Powell told reporters.
Powell, however, did not go into detail. Instead, he merely stressed that the level of oversight is going to be high because of what’s at stake. In the big picture, he said, “authority for overseeing Libra is going to be in a number of places.” Ultimately, it will be various agencies that will each oversee a different aspect of the Libra.
The Fed Reserve might, for example, oversee aspects of Libra relating to the reserves backing it as a stablecoin. The Department of Homeland Security will likely monitor it in case of terrorist financing and follow the paper trail of its money. Other sectors, like the SEC, will be closely following Facebook’s security token and how it will be traded.
Overall, Facebook’s Libra will require a multi-faceted approach to get the regulatory policy right. It seems that Powell is already aware of this.
The comments come a week after the Bank of England’s Governor spoke on the Libra. It was then that Mark Carney told the audience at Mansion House that he was keeping “an open mind” on the cryptocurrency. Unlike Powell, he seemed to be more optimistic on Libra’s potential to improve financial inclusion. Central bankers will also be creating a ‘cryptocurrency task force’ for G7 countries in the coming months, led by European Central Bank board member Benoit Coeure.
Powell’s comments, therefore, come at a time when most central banks are closely watching Facebook’s Libra. We can expect the controversy to continue until Libra’s release in 2020.
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