The bank of England, the FCA and Britain’s finance minister have been working together on Facebook’s proposal, as stated by FCA’s CEO.
“We are engaged with the Treasury and the Bank of England on it,” Andrew Bailey, during his presentation to UK’s ministers earlier today.
One week ago, Facebook announced that it would launch its Libra coin. The coin is backed by more than 20 tech companies and financial players. It hopes to make financial services available to over 1.7 billion people without bank accounts across the world.
Bank of England’s Governor, Mark Carney said that the bank welcomes the project “with an open mind” but “not an open door” meaning that Facebook may have to go through stringent measures before they can operate.
After announcing the project, Libra received open backlash from government officials and financial regulators. The outcry has been that Libra would give excess power to private companies, cause disruption on monetary and fiscal policies in place, across the globe. It is also claimed that Libra would facilitate money laundering if it is allowed to operate.
On Tuesday the 25th of June, FCA through Andrew Bailey, announced that the information provided by Facebook on their Libra digital currency is inadequate to get the authorization for their plans. FCA has asked Facebook to produce elaborate details on how it plans to expand into payments and launching its coin.
FCA has held discussions with Facebook over the Libra project, and many more engagements are expected between the two parties. However, FCA has already warned that Facebook may not get past the authorization required from the financial watchdog for them to operate if Facebook does not cooperate as expected.
“We will have to engage domestically and internationally, with Facebook and Libra. They are not going to walk through authorization without that,” Mr. Bailey speaking to the UK parliamentary treasury committee on Tuesday 25th.
“We have already engaged with Facebook, and there will be many more engagements. We are waiting to see how the responsibility will divide between Facebook and the other organization,” he said.
It is expected that the G7 summit will provide a forum for leaders to examine the risks currencies such as Libra has on Financial systems. The summit will be held on August 25, 2019, in Biarritz, France.