Mark Carney the Governor of the Bank of England listens during a Financial Stability Report news conference at the Bank of England in the City of London, Britain on July 11, 2019.POOL/The Associated Press
Facebook’s proposed Libra digital coin must show it is “rock solid” before it can be allowed to launch, Bank of England Governor Mark Carney said on Thursday.
The social-media giant plans to build a digital currency, raising concerns among global regulators that it could quickly become systemic given Facebook’s huge cross-border reach.
Mr. Carney, who joins a growing chorus of central bankers unsettled by the project, said many issues needed addressing first, such as anti-money laundering and terrorist financing controls, and managing and safekeeping the assets underpinning Libra.
“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,” Mr. Carney 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,” Mr. Carney told a news conference.
Bank of France Governor François Villeroy de Galhau said the more regulators look at the project, the more they have serious questions, and “perhaps even reservations.”
“It’s out of the question that this means of payment leads to regression on all of the international progress made against money-laundering,” he told a commission on digital sovereignty.
France is using its presidency of the Group of Seven to launch a task force to look at how central banks can ensure cryptocurrencies such as Libra are regulated from money-laundering to consumer-protection rules.
European Central Bank policy-maker Benoît Cœuré is due to deliver a preliminary report on the matter next week at a meeting of G7 finance ministers in Chantilly, north of Paris.
U.S. Federal Reserve chair Jerome Powell said on Thursday Libra raised serious concerns and there did not appear to be one agency with oversight. Libra should be subject to the highest level of prudential regulation, he added.
Libra would be a type of “stablecoin,” backed by a reserve of real-world assets, including bank deposits and short-term government securities.
“There are over 50 stablecoins on the market, and many are yet to prove that they are in fact, ‘stable,’ ” the BoE’s bi-annual Financial Stability Report published on Thursday said.
Mr. Carney said regulators recognized that Libra was trying to solve a series of issues such as domestic and cross-border payments being too slow and expensive.
Mr. Villeroy said Europe ultimately needed to develop its own homegrown retail payments system if it did not want to become dependent on foreign systems.