Fed Must Launch FedNow Ahead of Facebook’s Libra, Says Gov’t Official
Marie Huillet's original article for cointelegraph.com reduced by 42%
A senior United States federal official has argued that Facebook's Libra highlights the need for the Federal Reserve to act urgently and launch its own real-time payments system. In a letter addressed to the Federal Reserve's Board of Governors on Nov. 7, Rohit Chopra - a commissioner at the United States Federal Trade Commission - expressed his support of the central bank's proposal to launch a new, round-the-clock real-time payments system dubbed "FedNow Service." As previously reported, the FedNow Service - which has been in the works at least since 2018, if not sooner - was pitched as a new, 24/7/365 real-time payments and settlements service in a public announcement by the Fed this August.
"The laundry list of risks raised by the Libra project will take time to unpack and address. But regardless of Libra's ultimate fate, the proposal's emergence underscores the appetite for real-time payments and the urgency of intervention by the Federal Reserve." As reported, Libra has faced a major backlash from regulators worldwide since its unveiling this June, resulting in Facebook CEO Mark Zuckerberg being called in to testify before the U.S. Congress for a six-hour grilling before regulators and lawmakers.
Governor Lael Brainard - to whom Commissioner Chopra refers in his letter - has argued that Libra could pose risks to consumers due to a lack of clarity over their rights with respect to the token's underlying assets and to the system overall. For his part, Chairman Powell has stressed that Libra would need to satisfy higher-than-average standards, regulatory and supervisory expectations given it has 2.7 billion users.
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