Facebook’s new currency plan is under scrutiny in Congress

    (AP Photo/Marcio Jose Sanchez, File)

    Facebook’s ambitious plan to create a financial eco-system based on a digital currency faces questions from lawmakers

    Congress begins two days of hearings Tuesday on the currency planned by Facebook, to be called Libra, starting with the Senate Banking Committee. Meanwhile, a House Judiciary subcommittee will extend its bipartisan investigation of the market power of Facebook, Google, Amazon and Apple.

    President Trump tweeted last week that the new currency, Libra, “will have little standing or dependability.” Both Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell have expressed serious concerns recently that Libra could be used for illicit activity.

    The Treasury Department has “very serious concerns that Libra could be misused by money launderers and terrorist financers,” Mnuchin told reporters at the White House on Monday. “This is indeed a national security issue.”

    Facebook has “a lot of work to do before we get to the point where we’re comfortable with it,” Mnuchin said.

    Rep. Maxine Waters, D-Calif., said that Facebook, with some 2 billion users around the world, “is continuing its unchecked expansion and extending its reach into the lives of its users.” She called Libra “a new Swiss-based financial system” that potentially is too big to fail and could require a taxpayer bailout.

    David Marcus, the Facebook executive leading the project, says in his testimony prepared for Tuesday’s hearing by the Senate Banking Committee that Libra “is about developing a safe, secure and low-cost way for people to move money efficiently around the world. We believe that Libra can make real progress toward building a more inclusive financial infrastructure.”

    Facebook agrees with Powell’s view that the government’s review of Libra must be “patient and thorough, rather than a sprint to implementation,” Marcus’ statement says. “The time between now and launch is designed to be an open process and subject to regulatory oversight and review. In fact, I expect that this will be the broadest, most extensive and most careful pre-launch oversight by regulators and central banks in FinTech’s history. We know we need to take the time to get this right.”

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