Bank of England to mull access for likes of Facebook’s Libra

FILE – In this May 2, 2019, file photo Mark Carney the Governor of the Bank of England speaks during an Inflation Report Press Conference at the Bank of England in the City of London. The Bank of England is open to the idea of letting new payment services such as Facebook’s upcoming Libra hold funds with the central bank, Carney said Thursday, June 20. (AP Photo/Matt Dunham, Pool, File)

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

LONDON (AP) — The Bank of England is open to letting new payment services such as Facebook’s upcoming Libra hold funds overnight with the central bank, something historically limited to commercial banks.

In prepared remarks to bankers in London, the bank’s governor, Mark Carney, said it “makes sense to consider” extending access to new payment providers, as they “can improve the transmission of monetary policy and increase competition.”

He said Libra, in particular, could lower costs for money transfers.

There are several reasons why financial institutions hold money in reserve at the central bank but perhaps the most important is that it helps facilitate payments between banks and businesses. Being part of the plumbing of the financial system could be a benefit to upstarts like Libra.

Though Carney was broadly supportive of the future of new payment systems and their role in the financial system, he warned that the bank “approaches Libra with an open mind but not an open door.”

As such, he said, “it would have to meet the highest standards of prudential regulation and consumer protection.”

Carney’s remarks, provided by the bank ahead of their delivery later Thursday, echoed concerns raised by other regulators around the world.

Facebook, along with such partners as Uber, Visa, Mastercard and PayPal, unveiled Libra earlier this week. The new currency, set to launch next year, could open online purchasing to millions of people who do not have access to bank accounts and could reduce the cost of sending money across borders. Libra could also prove attractive to people in countries beset with hyperinflation such as Venezuela.

But French Finance Minister Bruno Le Maire said Facebook must ensure that Libra won’t hurt consumers or be used for illegal activities.

U.S. Rep. Maxine Waters, a California Democrat who heads the House Financial Services Committee, called on Facebook to suspend plans for the new currency until Congress and regulators are able to study it more closely.

Facebook said it will comply with all existing financial regulations, though it has not offered many details. The company said its wallet app for using Libra will walk people through a verification process to ensure they are who they say they are.

To get the access, Carney said Libra will have to address issues ranging from anti-money laundering to data protection to operational resilience. And Libra, he added, must be a “pro-competitive, open platform that new users can join on equal terms.”

“Whatever the fate of Libra, its creation underscores the imperative of transforming payments,” Carney said in his wide-ranging speech.

Carney said the bank needs to move with the times, as the nature of commerce changes. He said one-fifth of all sales in the U.K. were online last year and will grow to a quarter next year. And cash now makes up just a quarter of all payments, down from two-thirds a decade ago.

Libra has an additional challenge to confront. Facebook has faced a mountain of criticism over the past year or so over its poor record on privacy and its dominance in social media, messaging and related businesses.

Carney also said the bank will stress test the resilience of the British financial system to extreme weather. According to the bank, severe weather events such as flooding and heatwaves could mean higher insurance claims and economic losses such as reductions in home value. The design of the test will start in the fall, he said, and be completed in 2021.

The bank said the shift toward a greener economy also poses financial risks, including to banks and insurance companies that invest in energy companies.

“The path to a carbon-neutral economy will affect every institution in this country — very much including the Bank of England,” Carney said. “We need to do more than just cutting out cups and bringing up bees. We must lead by example.”

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Recent Videos

Amber's Wednesday Morning #OneMinuteForecast 10/28

Wednesday's Forecast: Partly cloudy with warmer highs

Veteran's Voices "Dutch" Bialke

National Day Calendar: Chocolate Day

Bismarck City Commission passes mask mandate with no penalty for noncompliance

WDA Volleyball

Mandan Football

Quarantine Voting

Ward County COVID Deaths

Coat Drive

Williston Wastewater Study

Linton-HMB Volleyball

Velva Football

Tuesday, October 27th, 2020 - KX Storm Team Evening Forecast - Dave Holder

KX Storm Team Full Evening Forecast w/Tom Schrader 10/27

COVID Memorial

Car for Veteran

Bridge Update

Risk Level Change


More Video

KX News Trending Stories

Don't Miss

More Don't Miss