WASHINGTON: Facebook chief executive Mark Zuckerberg opened the door on Wednesday to scaling back plans for its digital coin Libra if it cannot win approval as a new currency for global exchanges.

Zuckerberg made the comments as he faced a torrent of criticism at a congressional hearing over the planned cryptocurrency it is seeking to roll out next year.

“We clearly have not locked down exactly how this is going to work yet,” Zuckerberg told a hearing of the House Financial Service Committee.

“The goal of Libra is to build a global payment system rather than a currency.” This could result in digital payment systems using individual currencies, which would be less ambitious than a new coin linked to a basket of major currencies.

“I personally am much more focused on being able to help innovate and build a global payment system than I am in any specific makeup of what a currency or reserve might look like,” he said.

“There is already some discussion about whether it might make sense to build the kind of digital payment system ... based on individual sovereign currencies rather than a combination of these currencies into some new one.”

Asked about whether the digital coin could simply be linked to the US dollar, Zuckerberg said “the community is fairly split on this point.”

He said that it could be far simpler from a regulatory perspective but that “it may be less welcome in other places if it’s only 100 percent based on the dollar.”

Zuckerberg repeated his pledge that Libra — which is backed by an alliance of companies in a nonprofit, Swiss-based association — would not launch without full regulatory approvals.

The hearing brought out harsh criticism from lawmakers of Facebook’s data practices and scepticism about Libra in particular.

“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,” Representative Maxine Waters, who chairs the panel, said at the opening.

On Twitter, Waters ramped up her criticism of Facebook and pledged to block the digital currency plan.

“No one is above the law including Mark Zuckerberg. Facebook has allowed election interference, released private data, violated civil rights laws, among other offenses & now they’re trying to launch a #BigTechTakover by creating this mysterious #ZuckBuck? Not on my watch!” Waters tweeted.

Republican Representative Patrick McHenry offered a more sympathetic view, suggesting the Libra plan should be given the benefit of the doubt given that similar plans are being made in China and elsewhere.

“I have my qualms about Facebook and Libra ... but if history has taught us anything it’s better to be on the side of American innovation.”

China vs American leadership

In his prepared remarks, Zuckerberg argued that the digital currency plan could help “extend America’s financial leadership” and promote democratic values as other digital currencies emerge.

During questioning, Zuckerberg noted that a major competitive threat is coming from a Chinese public-private partnership and that “they are very focused on building this and exporting it around the world.”

He argued that policymakers should “weigh any risks of a new system against what I think are surely risks if a Chinese financial system becomes the standard” around the world.

If that happens, he said, “it would be very difficult if not impossible for us to impose our sanctions or the kinds of protections” American policymakers would like to see.

The Libra plan has been criticized by regulators and officials on both sides of the Atlantic, and the G7 said last week it should not launch “until the legal, regulatory and oversight challenges and risks are adequately addressed.”

US Treasury Secretary Steven Mnuchin said at a separate hearing Tuesday a Libra launch would be “premature” and that various issues such as protection against money laundering and other illicit activity still need to be worked out.

Last week, French Finance Minister Bruno Le Maire said Italy, Germany and France would take unspecified steps in the coming weeks “to show clearly that Libra is unwelcome in Europe. “

Published in Dawn, October 24th, 2019