In this report, we assess FRB Chairman Powell’s appearance today before HFSC at which he made clear that the FRB has serious concerns with Facebook’s Libra. Following up on HFSC leadership’s call for a moratorium, HFSC Chairwoman Waters (D-CA) pressed Mr. Powell on the FRB’s authority to regulate Facebook or the Libra Association and if FSOC has considered designating either organization as a systemically important FMU or SIFI. Citing ongoing FRB, interagency, and global Libra discussions, Mr. Powell said that “serious” privacy, money laundering, consumer protection, and financial stability concerns should be deliberately addressed before the Libra project proceeds. Ranking Member McHenry (R-NC) suggested that the U.S. regulatory regime is impeding the development of Libra-like projects, asking if this hurts financial inclusion. Chairman Powell is open to financial innovation if it occurs in a safe and sound manner.
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