Mark Carney, Bank of England governor said people need to understand the issues Facebook is attempting to solve with Libra. Carney delivered his remarks at the Financial Stability Report press conference posted on the Bank of England’s YouTube channel.
“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.”
Carney also believes that Libra has to be virtually perfect at the outset; at least with regards to financial security, for it to be released at all.
“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.”
Carney said Libra needs to address areas like basis risk, rebalancing risk, managing underlying assets, facilitating anti-money laundering and counter-terrorism.
Remember that U.S. Federal Reserve Chair Jerome Powell also made similar remarks about Libra.