Fed Chairman Jerome Powell testified before Congress earlier today and the topic of Libra was brought up. Powell said that he welcomes “responsible innovation” in banking as long as companies manage the risks, but he is skeptical of Facebook’s planned cryptocurrency Libra.
Below is the transcript via video posted by CNBC.
Rep. Maxine Waters: the Federal Reserve’s vice chairman of supervision, Randall Quarrels. “a letter in his capacity as chairman of the Financial Stability Board to the G20 leaders, noting a wider use of new types of crypto currency, a crypto assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation”. signalling that global regular tour coordination of Facebook will be a priority.
Chairman Powell Did the Federal Reserve speak with Facebook about their libera currency and, if so, were any concerns raised that’s the Federal Reserve Have any authority to supervise and regulate what could be the world’s largest payment system? Does the Federal Reserve. Have any concerns about monetary policy with regard to Libra?
Jerome Powell: Thank you, Madam Chair. Um, we did actually have a meeting with representatives of Facebook a couple of months before the announcement. I think they made fairly broad set of visits to authorities around the world.
But getting to your questions, let me start by saying that we do support responsible innovation in the financial services industry. As long as the associated risks are appropriately identified and managed and as, we’ll discuss while the project sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection of financial stability. These are concerns that should be thoroughly and publicly addressed for proceeding.
And that’s why at the Fed, we’ve set up a working group to focus on this set of issues. We’re coordinating with our colleagues in the government in the United States, the regulatory agencies and Treasury. We’re coordinating with central banks and governments around the world to look into this. Um, I’ll just add that the process of addressing these concerns, we think should be a patient and careful one and not a sprint to implementation.
Rep. Maxine Waters: So are you speaking of a working group within FSOC (Financial Stability Oversight Council)?
Jerome Powell: We have our own working group. I believe FSOC has already has already got a working group at the staff level, or, in effect, has a working group of staff levels.
Rep. Maxine Waters: Well, FSOC does have a Cryptocurrency you working group is FSOC or this working group reviewing the extensive policy questions and potential impact that Libra and calibre have. Do you know what they’re doing?
Jerome Powell: I do believe they are. I know there was a staff meeting at the staff level meeting just last week to focus on Libra and FSOC. So all the agencies were there. So I think the answer to question would be yes.
Rep. Maxine Waters: Uh, do you think that FSOC will designate Are is that side considering designating the Libra Association in calibre either? As systemic financial market utilities are non bank financial companies and subject them to enhance regulatory oversight or you aware of that?
Jerome Powell: I think it’s early to say there hasn’t been a principal’s meeting of FSOC since the Libra announcement. And while there been conversations, I think I think it’s highly likely that FSOC will be taking this on in a serious way. But that is in the hands of the treasury secretary, who chairs FSOC.