Banking News

Libra to be questioned by 26 central banks over financial stability

libra

Yesterday the Financial Times reported that officials from 26 central banks around the world will meet with Libra representatives to discuss trust and stability. The meeting will be held today by the Bank of International Settlement’s Committee on Payments and Market Infrastructure (CPMI) and hopes to clarify the scope of Facebook’s digital currency project.

The reported 26 banks are likely to be the members of the CPMI, which is an international payment standards body. They include the People’s Bank of China (PBOC), the U.S. Federal Reserve, the Bank of England, and the European Central Bank. Officials will meet with staff of the Switzerland-based Libra Association in Basel today.

These banks are no strangers to Libra. The Bank of England’s Governor, Mark Carney, has made detailed comments on the currency before. Plus, U.S. regulators have been some of the most critical of Libra from the start. Members of the House asked for a halt of activities, and Libra’s David Marcus was questioned by the Senate’s Committee on Banking, Housing and Urban Affairs.

Mu Changchun, a director of the PBOC, made comments on the potential impact of Libra back in July and released a training course on it last week. There are particularly serious concerns that Libra may negatively affect the sovereign currency in China, where Facebook is not available.

Meanwhile, the head of the CPMI and a board member of the European Central Bank, Benoît Coeuré, will reportedly chair the meeting. Coeuré spoke about Libra at an earlier conference of EU finance ministers, stating that “the bar for regulatory approval will be very high.”

The Libra Association maintains it will work with regulators: “We welcome this engagement and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.”

Libra has been the subject of intense discussion since its announcement. In August, multiple setbacks for the currency were reported, including European antitrust investigations, partners distancing themselves, and members of the U.S. House’s Financial Services Committee visiting Switzerland’s data privacy commissioner.

During this time, public comments from the Libra Association were scarce. Last week, it announced that it was applying for a payments license from the Swiss Financial Market Supervisory Authority. The regulator made an initial response within a few hours, making clear that risks need be covered by the Libra Association, not the coin holders.