(CN) — The governor of the Bank of England is backing Facebook's new cryptocurrency, the Libra, saying it could unlock billions of dollars in new financing and spur development in Great Britain and beyond.
Mark Carney, a Canadian and British citizen who heads the Bank of England, endorsed Facebook’s new digital currency during a speech Thursday night delivered in the midst of Great Britain's epic Brexit crisis.
In recent days, Facebook has been pushing its new currency with advertising across Europe in an effort to win support for its cryptocurrency. So far, European officials have been cautious about Libra, and questioned its legal basis. The currency is being developed in London.
Carney's speech, his last as outgoing governor of the Bank of England, was given inside the gilded chambers of the Treasury in London, and followed a powerful speech by Chancellor Philip Hammond that warned against Britain crashing out of the EU without a Brexit deal.
Both speeches came on a momentous day in London and were made shortly after the Tory party finished picking two contenders to succeed Prime Minister Theresa May. Those two are Boris Johnson, a former mayor of London committed to removing Britain from the EU even without a deal, and Foreign Secretary Jeremy Hunt, who is open to continuing negotiations with the EU.
Hammond's speech was interrupted by a Greenpeace activist who was forcefully grabbed by a Tory party member, Mark Field, who was attending the black-tie event; he escorted her forcefully out of the chamber.
Carney's speech cast London as the future global center for a cashless financial system that will allow more people across the planet gain access to capital. He also laid out how London could be a hub for a global system of trade emerging around climate-change actions.
“The revolution of payments may not be driven by the old bank-based systems but by a new architecture,” he said. “Major changes are on the horizon, bringing enormous advantages but also more than a few new challenges.”
Carney called Libra a “stablecoin” and said it would be backed by the pound sterling, among other currencies. Carney recently held a meeting with Facebook's Mark Zuckerberg to discuss Libra. Carney has been pressed to provide more details about their discussions, British media reported.
Facebook hopes to develop the Libra through its worldwide social media platform. It envisions people around the world gaining access to funding through Libra, which is also the astrological sign meaning balance and has as its symbol a pair of scales; it derives from the Latin word for the ancient Roman equivalent for a pound weight.
Around the world, companies and nations are developing similar forms of digital currency.
Carney said Libra “could be exchanged between users on messaging platforms and with participating retailers. As designed, Libra may substantially improve financial inclusion and dramatically lower the costs of domestic and cross border payments.”
He said “the Bank of England approaches Libra with an open mind but not an open door.” Carney said that Libra's standards and regulations would have to be thoroughly vetted and embedded into the financial system's checks and balances to protect consumers and investors, while also ensuring against money laundering before the Bank of England would back it entirely.
Still, he gave his full support to Libra. “Libra, if it achieves its ambitions, would be systemically important,” he said.
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