By CCN Markets: Federal Reserve members held discussions with Facebook over the company's Libra project. According to Federal Reserve Chairman Jay Powell during today's press conference, monetary policy makers are not worried that Libra will replace fiat money. He said:
"I think we're a long way from that...Digital currencies are in their infancy. So essentially, [I'm] not too concerned about central banks no longer being able to carry out monetary policy because of digital currencies or cryptocurrencies."
Meanwhile, regulating Facebook’s Libra is not on the agenda because the Fed doesn’t have specific authority to do so.
"We don't have plenary authority over cryptocurrencies as such. They play into our world through consumer protection and money laundering...But I would say through international forums we have significant input into the payment system and as you know play an important role in the payment system in the United States."
Fed Is Keenly Aware of Facebook's Libra
Powell noted the risk/reward dynamics of crypto:
"There are potential benefits here; there are also potential risks, particularly of a currency that could potentially have large application."
The Fed Chair also echoed recent comments by BOE Governor Mark Carney, saying:
We will wind up having quite high expectations from a sort of a safety and soundness regulatory standpoint if they do decide to go forward with something."
Powell acknowledged that the Fed regularly meets with private sector companies about fintech plans, and it isn't the only agency that Facebook met with:
“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. That’s something we’re looking at. 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."
Earlier today, the Fed revealed that interest rates would remain unchanged.