Facebook founder Mark Zuckerberg believes a global payments system “needs to get built” even if his company is not the one to emerge as the developer of the final product.
However, he continued by emphasising the importance of innovation and cautioned that if the US does not take the lead on this project the country’s “financial leadership is not guaranteed.”
He explained: “While we debate these issues, the rest of the world isn’t waiting. China is moving quickly to launch similar ideas in the coming months.
“A digital payments system is going to be important in the future. If America doesn’t lead on this, others will. Foreign companies or countries may act without the same regulatory oversight or commitment to transparency that we have.
“We’re already seeing how companies with very different values are restricting people based on their beliefs. There’s no guarantee that services which support democracy and fundamental rights around expression will win out.
Zuckerberg also revealed his support for US legislators if they decide to delay its launch; Libra was initially scheduled to be introduced publicly in 2020.
David Parker (founder, Polymath Consulting and co-founder, Konsentus) argued that timescale is the least of Zuckerberg’s worries. He elaborated: “Facebook doesn’t dominate China and a few other markets but overall it does dominate most of the world which places it in an incredibly powerful position.
“With Libra, I can send direct value between myself and a friend which, in principle, is absolutely fine. But what happens when this ‘friend’ is actually supporting terrorists groups elsewhere and I’m working in London to provide support for the cause? This is where the real issues lie.
“At the end of the day, legislators will view it as they don’t have a deadline and it’s vitally important that if the Libra project is to go ahead, it has to be watertight which is why they are engaging with so many governments and companies around the globe.”
How did this all start?
To say that Facebook’s endeavour into the world of payments has been a wild would be an understatement. First came the introduction of peer-to-peer payments via its Messenger app (didn’t quite take off in some countries) before earlier this year it unveiled its potentially global-infrastructure-changing stablecoin – Libra.
The controversial project has faced incredible regulatory pressure from the offset which has caused multiple exits from the original conglomerate of companies that gave its support, including MasterCard, Visa and PayPal.
In July, the United States House of Representatives Committee on Financial Services demanded a stop to all developments of Libra and its accompanying Calibra wallet.
Leading the board is Rep. Maxine Waters who has been outspoken about the risks that come with Libra. In the letter asking to halt operations, she wrote: “If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger US and global financial stability.
“These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”
Now Zuckerberg will have his opportunity to reassure the security of the project…
“I’m the first to acknowledge that we still have a lot of work to do.”
Zuckerberg argued the importance of Libra for those that are unable to access banking systems, claiming that the current infrastructure “is failing them” and that the current financial industry is “stagnant”.
He continued to reiterate that the project will not be controlled by Facebook itself but by the recently established Libra Association.
“What we’re discussing today is too important for any single company to do on its own,” said Zuckerberg. “That’s why we helped found the Libra Association – a coalition of 21 companies and non-profits working to give everyone access to financial tools.
“But even though the Libra Association is independent and we don’t control it, I want to be clear: Facebook will not be part of launching the Libra payments system anywhere in the world until US regulators approve.”
He described the coalition as a “positive step” and emphasised that now the organisation has been formally created with governance in place, it will lead all efforts moving forward.
Zuckerberg concluded: “I know we have a lot to do, but I also know that the problem of financial under-inclusion is solvable, and I believe that we can play a role in helping to find the solution.”