The Facebook executive responsible for the embattled libra cryptocurrency said he doesn’t fault companies that pulled out of the project, adding that he’s optimistic more organisations will sign on despite intense opposition from politicians who seem to fear financial innovation.
“I totally respect the fact that those businesses and those leaders have a responsibility to their shareholders, employees and stakeholders,” Facebook’s David Marcus said in a Tuesday interview with Bloomberg Television. “We are going to move forward. We are going to add more members.”
Facebook suffered a setback in recent days when a quarter of the membership of libra’s governing body, the Libra Association, defected from the effort amid pushback from regulators and lawmakers. Among those who stepped away are some of the association’s most high-profile names, including Visa, Stripe and Mastercard.
Visa, Stripe and Mastercard received letters earlier this month from Democratic US senators Sherrod Brown and Brian Schatz that urged the companies to “carefully consider” how they would manage potential risks associated with libra before proceeding with the project. Asked if he thought the letter constituted a threat from the senators to the companies, Marcus responded, “I don’t know, what did it sound like to you?” He added that such correspondence can have a chilling effect.
“For these types of letters to be circulated for a thing that is an idea — a project — and telling people you should not explore innovation,” that is a concern, Marcus said. “The core of our financial system has not evolved much. Consumers all around the world are paying the price for it,” he added.
Facebook announced its libra plans in June, saying the digital token would give consumers a low-cost way to make payments and transfer money across the globe. Regulators and lawmakers have expressed concerns that the coin would be used to bypass money-laundering rules and might undermine central banks’ control over monetary policy.
The Libra Association, which held its first meeting in Geneva this week, has said it has more than enough willing companies waiting in the wings to join the project. There are 1 500 organisations who have expressed interest in signing on, the association said, though so far only 180 of them meet the organisation’s criteria.
Even if new backers do sign on, libra is still a long way from reality. Facebook executives and the Libra Association have said they won’t launch the currency until regulators in the US and elsewhere have been appeased.
Industry watchers will soon get a fresh look at lawmakers’ sentiment toward libra. Facebook CEO Mark Zuckerberg is slated to testify before the house financial services committee next week. — Reported by Julie Verhage and Kurt Wagner, (c) 2019 Bloomberg LP