Facebook welcomes all the scrutiny its forthcoming cryptocurrency is receiving from policymakers and politicians. At least, that’s what David Marcus, who heads the company's new Calibra unit, told the Senate Banking Committee on Tuesday.
“[Fed] Chairman Powell has made clear the process for reviewing Libra needs to be patient and thorough, rather than a sprint to implementation,” Marcus said. “We strongly agree.”
“The time between now and launch is designed to be an open process and subject to regulatory oversight and review,” according to Marcus. “In fact, I expect this will be the broadest, most extensive, and most careful pre-launch oversight by regulators and central banks in FinTech’s history.”
Prompting the hearing on Capital Hill, Facebook’s banking ambitions have inspired fear and loathing from both sides of the political aisle.
“Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” President Donald Trump tweeted last week, while the Democratic-led Congress had already requested Facebook suspend development of its blockchain strategy.
Marcus did his best to address those fears and criticisms on Tuesday.
“Libra is about developing a safe, secure and low-cost way for people to move money efficiently around the world,” he said. “Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”
Addressing accusations that Libra could undermine American interests, Marcus insisted U.S.-based companies like Facebook should be leading the cryptocurrency charge.
“I believe that if America does not lead innovation in the digital currency and payments area, others will,” Marcus warned committee members on Tuesday. “If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different.”
Marcus said Libra is being designed as a digitally native currency, which can be used around the world.
Additionally, unlike existing “stablecoins” — digital currencies designed to minimize volatility by being “pegged” to a single asset — Libra will not have a fixed value in any single real-world currency.
Instead, Libra will be fully backed on a one-to-one basis through the Libra Reserve, which will hold a basket of currencies in safe assets, such as cash bank deposits and highly liquid, short-term government securities. These currencies will include the U.S. dollar, the British pound, the euro, and the Japanese yen.
According to Marcus: “This approach will minimize exposure to fluctuations from a single region, providing further stability for people around the world who could rely on Libra for their daily financial needs.”