Facebook’s Libra faces tough scrutiny before 2020 launch, warns Bank of England
The Bank of England has warned Facebook that its new digital coin, Libra, will face tough regulatory scrutiny ahead of its launch.
In minutes of the latest financial policy committee (FPC) meeting, the Bank said Libra had the potential to become a “systemically important” payment system and would need to show resilience across the entire chain.
The comments came as the Bank also gave its latest assessment of the UK’s financial stability, confirming that lenders remain able to withstand a worst-case disorderly Brexit.
It added that “extensive” contingency planning has helped mitigate most of the threats of a no-deal to UK financial stability, although it added that “material risks of economic disruption remain”.
In its strongest message yet on Libra, the Bank said it is planning to apply existing regulations for now, despite its EU counterparts announcing plans on Tuesday to draw up new rules for cryptocurrency payment systems.
Read on...
The FPC said: “Libra has the potential to become a systemically important payment system.
“The FPC judges that such a system would need to meet the highest standards of resilience and be subject to appropriate supervisory oversight.”
It added: “The terms of engagement for innovations such as Libra must be adopted in advance of any launch.
“UK authorities should use their powers accordingly.”
Facebook plans to launch its Libra coin and a digital wallet next year and the plans have caught the attention of regulators and central banks worldwide.
The Financial Conduct Authority (FCA) has already warned Facebook that Libra will warrant intense scrutiny.
In the FPC report, the Bank said it was concerned not just about Libra but also the other parts of the chain that form the entire system – such as the wallet providers and exchanges.
It said: “The resilience of the proposed Libra system would rely on the stability of not just the core elements of the Libra Association and Libra Reserve, but also the associated critical activities conducted by other firms in the Libra ecosystem such as validators, exchanges or wallet providers.”
This highlighted the need for “end-to-end resilience”, the Bank said.
We know everyone is suffering under the Tories - but the Canary is a vital weapon in our fight back, and we need your support
The Canary Workers’ Co-op knows life is hard. The Tories are waging a class war against us we’re all having to fight. But like trade unions and community organising, truly independent working-class media is a vital weapon in our armoury.
The Canary doesn’t have the budget of the corporate media. In fact, our income is over 1,000 times less than the Guardian’s. What we do have is a radical agenda that disrupts power and amplifies marginalised communities. But we can only do this with our readers’ support.
So please, help us continue to spread messages of resistance and hope. Even the smallest donation would mean the world to us.
-
Show Comments
Leave a Reply
You must be logged in to leave a comment.Join the conversationPlease read our comment moderation policy here.
