Central banks will want oversight of Facebook's Libra

LONDON: Major central banks and regulators will want oversight of Facebook’s proposed new currency and payment system, Libra, to ensure it is safe and does not allow money laundering or finance terrorism, Bank of England Governor Mark Carney said.

“It has to be safe, or it’s not going to happen,” Carney told the BBC in an interview broadcast on Friday. “We, the Fed, all the major global central banks and supervisors, would have direct regulatory (oversight).”

Britain’s Financial Conduct Authority – responsible for consumer protection and anti-money laundering – would also have a major supervisory role to play, Carney added.

Carney said on Thursday that Facebook cannot expect its new Libra currency to benefit from the same unregulated free-for-all that helped the company achieve a dominant position in social media.

Libra will be a digital currency backed by a reserve of real-world assets, including bank deposits and short-term government securities, and held by a network of custodians. The structure is intended to foster trust and stabilize the price.

Although Libra prices may not always align with the underlying assets, holders should have a “high degree of assurance” that they can convert coins into traditional currency based on an exchange rate, according to the project’s information.

Libra will trade on a network of exchanges, which Facebook did not identify.