Speaking like “a normal human being”, Fed Chairman Powell says Libra raises “many serious concerns regarding privacy, money laundering, consumer protection, and financial stability.”
For comments on the Libra White Paper, see RTC Article on Libra White Paper
On July 10, 2019, Federal Reserve Chairman Jerome Powell appeared before the House Financial Services Committee for his semi-annual report to Congress. Although his prepared remarks and opening statement did not touch on Facebook’s Libra, Committee Chair Maxine Waters (D. CA) opening question was on Libra and Facebook’s Calibra wallet and her concerns about both (as expressed in the Committee’s July 2nd letter to Mark Zuckerberg, Facebook COO Sheryl Sandberg, and Calibra CEO David Marcus). The question and Chairman Powell’s answer are at the 20-minute mark of the CSPAN video ( Congressional Video ). The Chairman’s answer:
“We do support responsible innovation in the financial services industry as long as the associated risks are appropriately identified and managed. And as we’ll discuss, while the project sponsors hold out the possibility of public benefits, including improved financial access by consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability. These are concerns that should be thoroughly and publicly addressed before proceeding. And that’s why at the Fed we’ve set up a working group to focus on this set of issues. We are coordinating with our colleagues in the government in the United States, the regulatory agencies and Treasury; we’re coordinating with central banks and governments around the world to look into this. I’ll just add that the process in addressing these concerns, we think, should be a patient and careful one, and not a sprint to implementation.”
Chairman Powell’s language is particularly interesting. He sees “a possibility of public benefits” but he appears to have no doubt that Libra raises “many serious concerns regarding privacy, money laundering, consumer protection, and financial stability.” He is also telling Facebook and the Libra/Caibra project sponsors that regulatory approval will be at the regulators’ pace (“patient and careful”), not the usual fintech pace (“a sprint to implementation”).
And I echo Ranking Member McHenry’s statement that Chairman Powell’s “candor is welcome and encouraged, and we thank you for attempting to speak like a normal human being …”. I have followed four Federal Reserve chairs (Greenspan, Bernanke, Yellen, and Powell), and have found that Chairman Powell is the only one of the four that I could consistently understand! In fact, Alan Greenspan’s infamous line – “Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said” – seems to have been the modus operandi of his successors, also … except for Chairman Powell.