The bankers have taken a look at Facebook’s Libra, and the response is a resounding “Meh.”
U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that Facebook discussed its plans to launch its cryptocurrency prior to unveiling Libra on Tuesday.
“Facebook, I believe, has made quite broad rounds around the world with regulators, supervisors and lots of people to discuss their plans and that certainly includes us,” Powell said during a press conference at the Federal Open Market Committee. And Facebook’s crypto project remains something that the Fed is “looking at,” he said.
That in itself, however, isn’t unusual, said the Fed chairman: “We meet with a broad range of private sector firms all the time on financial technology, and there’s just a tremendous amount of innovation going on out there.”
Powell went on to say that Facebook’s venture into the world of digital currency presents “potential benefits,” as well as “potential risks,” particularly since the tech giant’s coin could gain “large application.”
“I would echo what Governor [Mark] Carney said, which is that we will wind up having quite high expectations from a safety and soundness and regulatory standpoint, if they do decide to go forward with something,” Powell said.
Chairman Powell further added that while the Federal Reserve does not have “plenary authority over cryptocurrencies,” digital currencies do nevertheless “play into” the Fed’s world.
But does Facebook’s Libra have the potential to disrupt it?
Nah, said Powell. As far digital currencies, be they Zuck Bucks or bitcoins, “replacing” central bank currencies, “we’re a long way from that,” he said. “So, essentially, [I’m not] too concerned about central banks no longer being able to carry out monetary policy because of cryptocurrencies or digital currencies.”
In other words, Powell doesn't advise that you "short the bankers" anytime soon. Then again, what else is the chairman of the bankers to say?