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.
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 need your help to keep speaking the truth
Every story that you have come to us with; each injustice you have asked us to investigate; every campaign we have fought; each of your unheard voices we amplified; we do this for you. We are making a difference on your behalf.
Our fight is your fight. You’ve supported our collective struggle every time you gave us a like; and every time you shared our work across social media. Now we need you to support us with a monthly donation.
We have published nearly 2,000 articles and over 50 films in 2021. And we want to do this and more in 2022 but we don’t have enough money to go on at this pace. So, if you value our work and want us to continue then please join us and be part of The Canary family.
In return, you get:
* Advert free reading experience
* Quarterly group video call with the Editor-in-Chief
* Behind the scenes monthly e-newsletter
* 20% discount in our shop
Almost all of our spending goes to the people who make The Canary’s content. So your contribution directly supports our writers and enables us to continue to do what we do: speaking truth, powered by you. We have weathered many attempts to shut us down and silence our vital opposition to an increasingly fascist government and right-wing mainstream media.
With your help we can continue:
* Holding political and state power to account
* Advocating for the people the system marginalises
* Being a media outlet that upholds the highest standards
* Campaigning on the issues others won’t
* Putting your lives central to everything we do
We are a drop of truth in an ocean of deceit. But we can’t do this without your support. So please, can you help us continue the fight?