Bank of England lays down rules for Facebook's Libra

By John Reynolds on 10th October 2019

Fintech

FPC said digital currencies must show financial and operational resilience.

Bank of England lays down rules for Facebook's Libra
Image source: Image provided by Pixabay

Facebook's new cryptocurrency Libra must meet the "highest standards" if it's to get the go ahead for a UK launch, the Bank of England has said.

In its strongest intervention to date, the Bank of England's Financial Policy Committee (FPC) said Libra and rival digital currencies would have to show their financial and operational resilience and show enough transparency so they could be monitored. 

These currencies, the FPC said, would have to show the same resilience as traditional banks.

But the FPC highlighted that Libra had the potential to become an "important payment system".

"Libra has the potential to become a systematically important payment system. The FPC judges that such a system would need to meet the highest standard of resilience and be subject to appropriate oversight," the FPC said.

"The terms of engagement for innovations such as Libra must be adopted in advance of any launch. UK authorities should use their powers accordingly."

Facebook has said it plans to launch its digital currency in 2020, despite opposition from data protection and privacy authorities globally as well as regulators.

France and Germany have pledged to block Libra from operating in Europe and backed the development of a public cryptocurrency instead.

Facebook also suffered a blow when PayPal pulled out of Libra.

The US payments processing firm said it would instead focus on its own core business.

The intervention from the Bank of England comes as Facebook CEO Mark Zuckerberg is to testify in front of Congress, where he will be questioned about Libra.

Zuckerberg will be the only witness at a hearing on Capitol Hill later this month, amid efforts by Congress to find out more details about Libra.