A growing chorus of critics in government and the financial sector has raised concerns about Facebook’s plans to create a global currency.
This week, two hearings in Congress highlighted those fears, with most lawmakers saying it’s dangerous to give the Silicon Valley giant unprecedented influence over the financial system. Others argued that while Facebook’s record on privacy is poor, Congress shouldn’t stifle innovation.
Facebook says the cryptocurrency, known as Libra, would bridge a gap in the financial system for people who lack access to traditional banking. The project would ultimately allow Facebook’s 2.4 billion users worldwide to send and transfer money quickly — and with almost no fees, the company said.
Here’s a roundup of what officials at home and abroad are saying about Facebook’s Libra:
"Facebook is asking people to trust them with their hard-earned paychecks. It takes a breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next? Let’s run our own bank and our own for-profit version of the Federal Reserve for the world,” Sen. Sherrod Brown (D-Ohio) said.
“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data. With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” Rep. Maxine Waters (D-Calif.) said.
“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action,” according to a letter from five Democratic House leaders.
“I don’t trust Facebook. . . . Instead of cleaning up your house, you are starting a new business model,” Sen. Martha McSally (R-Ariz.) said.
“The size of Facebook’s network means it could be essentially, immediately and systemically important,” said Federal Reserve Chair Jerome H. Powell in testimony before the House Financial Services Committee.
“Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks,” said President Trump on Twitter.
“Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human trafficking. . . . They have a lot of work to do,” Treasury Secretary Steven Mnuchin said.
“As long as it’s [a] level playing field reviewed by regulators, we have no problem with what anyone does,” said Jamie Dimon, chief executive of JPMorgan Chase.
“I would say this is first of all a question of sovereignty. You have states, the United States, France, Germany, Italy — all sovereign states with sovereign currencies: dollar, euro and so on — and they are sticking to some very strong commitments, some very strong rules. We cannot accept a new currency having the exact same kind of power, without the same kind of rules, without the same kind of commitments and without the same kind of obligations,” France’s Finance Minister Bruno Le Maire told CNBC on Wednesday.
“The issuance of a currency does not belong in the hands of a private company because this is a core element of state sovereignty . . . The euro is and remains the only legal means of payment in the euro area,” German Finance Minister Olaf Scholz said this week.
“It is very important for regulatory agencies in the world to pay close attention to these developments [with Libra] and to make sure that they are not too late in undertaking the right steps,” said Gita Gopinath, chief economist for the International Monetary Fund.
“Washington must go beyond the hype and ensure that it’s not the place where innovation goes to die. Just because we may not fully understand a new technology proposal does not mean we should immediately call for its prohibition, especially when that proposal is just that, a proposal,” Rep. Patrick T. McHenry (N.C.), ranking Republican on the House Financial Services Committee, said during a House hearing Wednesday.
“Look, I don’t have a crystal ball. I have no idea if Libra will lead to greater financial inclusion, lower remittance costs — which have the opportunity and would mean families could send money to each other more cheaply and easily than today — or if it’s just a ploy to shoot Facebook’s Twitter mentions through the roof. We’ll see,” McHenry said.
“I don’t think you should launch Libra at all, because the creation of a new currency is a core government function and should be left to democratically accountable institutions that are accountable to the American people,” Rep. Carolyn B. Maloney (D-N.Y.) said during a House hearing Wednesday.
“There are a lot of questions about this project. It’s big and very bold. Some would say it’s too bold,” Maloney said.
“Facebook, which is a publishing platform, an advertising network, a personal telecommunications network, a surveillance corporation, a content distributor, now also wants to establish a currency and act through its wallet as, at minimum, a payment processor. Why should these activities be consolidated under one corporation?” Rep. Alexandria Ocasio-Cortez (D-N.Y.) said during a House hearing Wednesday.
“We do not want to stifle innovation, but we do have a healthy dose of skepticism. This is not Silicon Valley; you cannot work out problems as you go,” Rep. Nydia M. Velázquez (D-N.Y.) said during a House hearing Wednesday.
“Facebook has chosen to advance a set of values in which truthful reporting has been displaced by flagrant displays of b------t . . . I have great respect for Facebook, but Facebook now wants to control the money supply. What could possibly go wrong?” Sen. John Neely Kennedy (R-La.) said during a hearing Tuesday.
“Digital technology innovations like this may be inevitable and could be beneficial . . . The United States should lead in developing what the rules of the road should be,” Sen. Mike Crapo (R-Idaho), chairman of the Banking Committee, said during a hearing this week.
“We should be exploring this and considering the benefits as well as the risks, and take a prudent approach. But to announce in advance that we have to strangle this baby in the crib is wildly premature,” Sen. Patrick J. Toomey (R-Pa.) said during a hearing this week.