Facebook cryptocurrency Libra to face strict tests in UK
Bank of England warns social media giant over digital coin launch
Facebook’s plans to launch its own digital coin, Libra, may make the company subject to its most stringent scrutiny yet.
The Bank of England’s quarterly financial policy committee (FPC) report said: “Libra has the potential to become a systemically important payment system” but to do so “such a system would need to meet the highest standards of resilience and be subject to appropriate supervisory oversight”.
The social media giant is launching its cryptocurrency, announced in June, partly to help the 1.7billion people in the world with no access to basic financial services. Migrants lose$25 billion every year in remittance fees alone, and some feel cryptocurrencies could offer a real solution.
Facebook wants to set up a digital wallet, named Calibra, to allow users to change money into its cryptocurrency to shop online and in store. Users would be able to transfer Libra via WhatsApp or Facebook Messenger on a smartphone as easily as sending a text and for very little cost.
However, if digital wallets are to provide the main functions of a traditional bank account they must be similarly robust. The Bank of England, whose governor is Mark Carney, is determined to ensure that Facebook meets rigorous standards before it gets approval in the UK.
Britain is not the only country voicing concerns over Libra. France’s Finance Minister, Bruno le Maire has said that until concerns over consumer risk and monetary sovereignty of member states are addressed, Libra will not get the go-ahead in Europe.