WASHINGTON (Reuters) – Facebook Inc’s planned cryptocurrency, Balance, and can promote financial integration, but also raises concerns about consumer protection, privacy, and a possible “back-door dollarization,” IMF chief economist said on Wednesday.
Representations of virtual currency are to be displayed on the front of the monitor the logo in this illustration picture the 21 of June, 2019 at the latest. REUTERS/dado Ruvic/Illustration
Gita Gopinath told reporters, the International Monetary Fund, was the highlight of that risk and concerns about Facebook’s plans, saying that it is important for policy makers to pay close attention to these developments.
“It’s very important to get the regulatory agencies in the world to pay close attention to these developments and in order to make sure that they are not in the business of the appropriate steps to take,” Gopinath said.
On Wednesday, members of the U.S. House Financial Services Committee questioned David Mark and the Facebook board of control, on the Scale of the project. Mark was grilled on Tuesday by the U.S. Senate Banking Committee on the potential risks posed by the Scale to be in the privacy of your personal data and the protection of consumers and for the purpose of money laundering controls in place.
The social media company is in search of the victory over Washington, and after it shocked the regulators and the legislators, by its June 18 announcement that it plans to launch a new digital currency called the Scale by the year 2020.
Policy-makers and the financial watchdogs in the United States and elsewhere, the fear of widespread adoption of the digital currency by Facebook’s 2.38 billion users will be able to upend the financial system.
Gopinath said the Fund’s preferred comprehensive financial inclusion, digital currencies, could have a role to play in this process.
But, she said, and there was also the important question of the protection of consumer privacy the impact on the conduct of monetary policy and other issues.
“If you look at it, particularly in countries that are not reserve currency countries, could lead to back dollarization?” she said. “All of these questions, and whether there are sufficient checks and balances in place to prevent money laundering … are very important to us.”
Facebook is one of the 28 founding members of the Libra Society, who will be based in Geneva and has been in discussion with the Swiss regulatory authorities have a framework.
Reporting by Andrea Shalal in Washington; Editing by Chizu Nomiyama and Matthew Lewis