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Saturday 24 August 2019

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Facebook ‘won’t launch Libra until regulators approve’

Written by Hannah McGrath
17/07/2019

Facebook is prepared to postpone the launch of its Libra digital currency until global financial regulators are satisfied that it meets security, data privacy and consumer protection standards.

In an appearance before the United States Senate Banking Committee, David Marcus, a former PayPal executive who is leading Facebook’s Libra unit, told lawmakers that the company had heard concerns raised by governments and policymakers “loud and clear”.

The social media giant announced last month that the Libra digital currency would be ready to launch in 2020.

In pre-prepared remarks released before two scheduled appearances before US lawmakers this week, Marcus said: "Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals."

Facebook has developed the Calibra digital wallet, which will enable its two billion users across the Facebook, Instagram and WhatsApp platforms to store the cryptocurrency and use it pay for online goods and send payments.

It said that the digital currency would be overseen by the independent Libra Association, featuring 28 technology and payments firms - including Mastercard, PayPal and Uber - in a bid to engage with governments, central banks and regulators to ensure a stable roll-out for the digital currency.

Appearing before the committee, Marcus faced claims from Democratic senator Sherrod Brown that the plans were “delusional” and that the company did not “deserve our trust” in the wake of data privacy breaches such as the Cambridge Analytica scandal.

In response, Marcus told the committee: “To earn people's trust, we will have to have the highest standards when it comes to privacy, and the way we've built Calibra is that no financial data or account data that is collected in Calibra to offer the service will actually be shared with Facebook.”

Highlighting a key data privacy concern raised by lawmakers, he added: "The way we've built this is to separate social and financial data because we've heard loud and clear that they don't want those two types of data streams connected, so this is the way the system is designed.”

When challenged about the decision to set up the Libra Association - which will be based in Geneva - in order to participate in management of the Libra, Marcus said: “Facebook will only have one vote and will not be in a position to control the association, nor will Facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with monetary policy.”

Last week the plan came under mounting pressure after Jerome Powell, chairman of the Federal Reserve, and US president Donald Trump, raised concerns over the need to regulate Libra in order to prevent disruption to the banking system.

Earlier today, French finance minister Bruno Le Maire said that discussing the risks associated with Facebook’s Libra plan would be the focus of discussions of the G7 group of finance ministers in Paris this week.

He told the Italian newspaper Corriere della Sera that the “red line” for the grouping would be ensuring that the Libra does not transform into a sovereign currency.



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