Facebook Libra has to be 'rock solid from the start', says Bank of England Governor

Facebook’s proposed Libra digital coin must show it is “rock solid” before it can be allowed to launch, Bank of England Governor Mark Carney said on Thursday.

The social media giant plans to build a digital currency, raising concerns among global regulators that it could quickly become systemic given Facebook’s huge cross-border reach.

But Carney said many issues needed addressing first, such as anti-money laundering and terrorist financing controls, and managing and safekeeping the assets underpinning Libra.

“If you are a systemic payment system, you have to be on all the time. You can’t have teething issues, you can’t have people losing money out of their wallets,” Carney said.

“This is not learning on the job stuff, it’s got to be rock solid right from the start or it’s not going to start,” Carney told a news conference.

U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that serious concerns need to be addressed before Libra could launch, highlighting the global regulatory hurdles.

Libra would be a type of “stablecoin”, backed by a reserve of real-world assets, including bank deposits and short-term government securities.

“There are over 50 stablecoins on the market, and many are yet to prove that they are in fact, ‘stable’,” the BoE’s bi-annual Financial Stability Report published on Thursday said.

Carney said regulators recognised that Libra was trying to solve a series of issues like domestic and cross-border payments being too slow and expensive.