In a July 2 letter addressed to Facebook CEOs Mark Zuckerberg and David Marcus, and COO Sheryl Sandberg, the lawmakers request that Facebook and its partners immediately agree to a moratorium on the development of Libra and its dedicated Calibra wallet.
The committee claims that the project may lead ”to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.” The committee notes that it believes such an endeavor could have serious implications:
”This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook's over 2 billion users, but also for investors, consumers, and the broader global economy.”
The letter claims that it foresees cybersecurity vulnerabilities, which could potentially lead to trillions of dollars of uninsured deposits being lost, and that consumers could be exposed to severe privacy and national security concerns.
The committee also notes that Facebook’s troubled past with user data further exacerbates those concerns. The letter claims:
“If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability.”
The committee claims that “it is imperative that Facebook and its partners immediately cease implementation plans” until regulators explore the issues above. During the proposed moratorium, the regulators intend to hold public hearings on the risks and benefits of the system and explore legislative solutions. The letter concludes:
“Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”
Also yesterday, Nobel prize-winning economist Joseph Eugene Stiglitz published an article claiming that “every currency is based on trust, but only a fool would trust Facebook’s Libra.”