Zuckerberg admits Libra digital currency is a risky project

October 24, 2019 09:08
Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington on Wednesday. Photo: Reuters

Facebook CEO Mark Zuckerberg conceded on Wednesday that the firm's planned digital currency Libra is a “risky project,” but sought to reassure US lawmakers that the proposed new unit could lower the cost of electronic payments and open up the global financial system to more people.

Appearing before a congressional panel in Washington, Zuckerberg said Facebook will insist on US regulatory approval before launching Libra, which is being established by a Switzerland-based consortium including venture capital firms and nonprofits, Reuters reports.

Facebook would even leave the Libra Association if other companies sought to launch the currency without that sign-off, he said.

Libra has faltered in recent weeks amid sustained criticism from lawmakers and regulators globally over fears it may aid money laundering and upend the global financial system.

Several financial partners including Mastercard, Visa, PayPal and eBay have abandoned the project.

Representative Ann Wagner, a Republican, pressed Zuckerberg on why so many companies abandoned the Libra effort.

“You’ve lost these stable partners and I find it highly concerning,” she said. “Why do a number of these founding members have concerns of whether you’re up to the task of meeting our money laundering and regulatory standards?”

Zuckerberg conceded that the companies dropped out because Libra is a “risky project” and that he was not sure it would even work.

The Facebook chief last appeared before Congress in April 2018 when he fielded 10 hours of questions over two days from House and Senate panels on political consulting firm Cambridge Analytica’s misuse of Facebook customer data to interfere in the 2016 US presidential election.

On Wednesday, he acknowledged Facebook’s mistakes, saying he understood the social media giant was not the “ideal messenger” for the Libra project and that the company has “work to do to build trust.”

But he said past missteps should not stand in the way of Libra, based in Switzerland.

“The vision here is to make it so that people can send money to each other as easily and cheaply as it is sending a text message.”

During the testimony, Zuckerberg also fended off aggressive questions on election interference, free speech, hate groups and fake news from members of the US House of Representatives Financial Services Committee.

Representative Maxine Waters, the panel’s fiery Democratic chair, quizzed Zuckerberg on Facebook’s steps to combat misinformation and voter suppression ahead of the November 2020 US presidential election. She also suggested policymakers should consider breaking up Facebook.

Waters had previously called for halting the Libra project before its planned 2020 launch, and had drafted legislation that would bar tech companies from entering financial services.

“It would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the Libra project,” Waters told Zuckerberg.

Republican and Democratic lawmakers alike blasted Facebook for failing to crack down on online child exploitation and political misinformation, and for data privacy lapses.

Several said they don't trust Facebook to help provide financial services to its 2.4 billion users given the past scandals.

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