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The Bank of England, the UK Treasury, and the UK’s top financial regulator are working together to scrutinise Facebook’s (FB) new cryptocurrency project Libra.
“We are engaged with the Treasury and the Bank of England on it,” Andrew Bailey, the CEO of the UK’s Financial Conduct Authority (FCA) told MPs on Tuesday. “We’re working together on it.”
Facebook last week announced the launch of a new cryptocurrency project, Libra. The new “global” currency, which is backed by over 25 other top tech companies, will be launched next year and aims to help the estimated 1.7 billion unbanked people in the world access financial services.
Libra’s launch met an immediate backlash from global politicians and regulators who fear the new project could hand too much power to private companies, disrupt monetary and financial policy, and enable money laundering.
“It has the potential to be extremely significant,” Bailey said on Tuesday. “It does raise very big issues for the public policy world.
“At the moment, I would have to say there is insufficient detail on it to really understand what the business model is.
“We will have to engage very heavily, but as I say we’re gearing up with the Treasury and the Bank of England.”
The Treasury has yet to comment on Libra, but Bank of England Governor Mark Carney last week appeared to give the project his cautious backing when he said it could “substantially improve financial inclusion and dramatically lower the cost of domestic and cross border payments.” However, Carney said there would be significant regulatory scrutiny of the project and “the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”
Bailey was giving evidence to UK MPs on the Treasury Select Committee about the work of the FCA. The FCA is the UK’s top financial watchdog, responsible for policing the UK’s financial system.
Bailey said the FCA has “already engaged with Facebook and there'll be many more engagements.”
However, he said the watchdog was waiting to see how responsibility for the project would divide between Facebook and the Libra Association, the new Geneva-based non-profit set up to govern the Libra cryptocurrency and the blockchain it will operate on.
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