The governor of the Bank of England, Mark Carney has recently said that people need to be aware of the problems that Facebook is attempting to fix with its upcoming stablecoin, Libra. Despite the downsides of the project Carney spoke on the recently announced cryptocurrency at the Financial Stability Report press conference earlier this week on 11th July.
“It’s way too expensive to do domestic payments. It’s way too slow, and that hurts consumers and businesses. It stifles innovation, and it’s far too expensive to send money cross-border, and there are huge financial inclusion issues related to that and costs related to that. So, while we are trying to address all these issues, we have to absolutely acknowledge the problem that they’re trying to solve. And if it’s not this, we’d better have some answers for what else it is.”
Despite this, Carney is a big believer that because of the sheer scale of project Libra, it has to be near perfect from the get-go in order for it to be released at all. At least, he means this from a financial security viewpoint.
“It’s either successful or it isn’t. If it’s successful, it becomes systemic, because it would involve a very large number of users. And if you’re a systemic payment system, it’s 5-sigma. You have to be on all the time. You can’t have teething issues. You can’t have people losing money out of their wallets … The standards are in a different zip code — to use the American term.”
The governor didn’t stop there though as he listed several other problematic areas that Libra needs to address. Some of these issues include “basis risk, rebalancing risk, managing underlying assets, facilitating anti-money laundering and counter-terrorism” are some of the areas that need to be looked into before the stablecoin is launched.
Carney isn’t the only government official to comment on Libra with the United States Federal Reserve chairman recently making similar comments on the stablecoin. Jerome Powell said that the reserve doesn’t have “have plenary authority over cryptocurrencies as such,” but he does claim that the reserve still has “significant input into the payment system.”