Federal Reserve Chairman Jerome Powell on Wednesday said Facebook's planned Libra digital currency raises "many serious concerns" including potential risks to the stability of the financial system because of the huge user-base of the social media giant.
At a House Financial Services Committee hearing, Powell said the central bank has a working group that's looking at Libra.
He added that the Financial Stability Oversight Council — a group that includes top financial regulators across the government — convened a staff-level meeting on Facebook's plans last week.Fed officials met with Facebook about two months before Libra was announced, he said.
"While the project's sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability," he said. "These are concerns that should be thoroughly and publicly addressed before proceeding."
Powell's comments illustrate the growing concern in Washington about Facebook's sweeping plans to become a force in the financial system. The company will face questions about Libra in back-to-back House Financial Services and Senate Banking Committee hearings next week.
Powell said the Fed was coordinating with colleagues not only in the U.S. government but with central banks and governments around the world. He said the process of addressing concerns around Libra "should be a patient and careful one and not a sprint to implementation."
Powell said he expected the Treasury Department-led Financial Stability Oversight Council, which is responsible for addressing large-scale risks across the financial system, "will be taking this on in a serious way.
" The council has the power to designate financial firms as "systemically important" and subject them to stricter Fed oversight.Libra, he said, was a financial stability concern because of the possibility of "quite broad adoption" given Facebook's user base of more than 2 billion.
"If there were problems there associated with money laundering, terrorist financing, any of the things that we're all focused on, including the company, they would arise to systemically important levels just because of the mere size of the Facebook network," he said.
Article originally published on POLITICO Magazine