Incoming BoE Gov Scrutinizes Libra

Incoming BoE Gov Scrutinizes Libra

Andrew Bailey, the incoming governor of the Bank of England (BoE), said that he wasn’t sure about Facebook’s proposed digital currency, Libra, because he wasn’t sure about whether it had backing by actual assets, according to a report by Reuters.

“I think the initiative has been handled pretty poorly in the sense that it was very vague,” Bailey said to other legislators in Parliament. He starts his tenure as governor on March 16.

Bailey also heads the Financial Conduct Authority (FCA), and he said he asked the developers of Libra whether the people who owned it would have a claim on the assets being shared and traded.

“You could never get a completely clear answer to that question, consequence of which is I remain pretty suspicious,” he said.

Facebook’s plan to launch Libra quickly ran into trouble as it tried to convince legislators and regulators all over the world that it was going to create a viable currency. Many questioned the validity of Facebook’s claims, saying that Libra could potentially harm financial stability and allow for illicit activity like money laundering.

Bailey added that he thought the amount of data which would be created as a result of the currency would be problematic for regulators. 

Facebook recently pivoted and said that it was going to revamp the currency.

The new version of Libra would accept a bunch of different digital coins, changing its original purpose of being a single worldwide digital currency, made for the 1.7 million unbanked people around the globe, allowing them to send money anywhere at little or zero cost to them.

The new version would be like a payments network.

David Marcus, Facebook executive and Libra co-founder, recently said the network wouldn’t preclude projects by central banks.

“I want to really make that distinction between the network and the assets that are running on top of the network, which I think could be issued by many different entities, whether it’s central banks or the private sector,” Marcus said.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.