The commissioner of the Federal Trade Commission (FTC) has stated that Facebook’s Libra illustrates the need for urgent action by the Federal Reserve (Fed) to implement its own program of real-time payments. Federal commissioner supports “FedNow” service citing Facebook’s Libra.
Federal trade commissioner, Rohit Chopra wrote a letter to the US Central Bank in support of the potential development of the “FedNow System”. The community is now exploring the potential high-speed payment system.
The initiative is a logical extension of the established task of the Federal Reserve in check clearing, wire transfers, and the ACH program.
Rohit Chopra, FTC Commissioner, said in his letter:
“A private megabank monopoly over our electronic payments system will suppress innovation and distort incentives in our markets.”
The Federal Reserve must ensure that small banks, credit unions, and other new entrants can reach and expand on the future payment system by creating a public competitor, he said.
Commenting on Facebooks’ Libra, Rohit Chopra said:
“The vague and scant details on the tech platform’s proposed shadow global central bank have sounded international alarm bells, particularly in light of Facebook’s ongoing scandals and reputation for abuse.”
“The laundry list of risks raised by the Libra project will take time to unpack and address. I share the serious concerns raised by Chairman Jerome Powell and Governor Lael Brainard,” he added further.
Federal commissioner supports “FedNow” service citing Facebook’s Libra. Rohit Chopra also stated that to end the monopoly, his arguments are in support of a real-time payment system being established by the Federal Reserve at the earliest.
“As large private firms on Wall Street and Silicon Valley seek to leverage their market power through control of critical infrastructure, it is more important than ever for the Board to implement this proposal quickly.”
Rohit Chopra raised the question that, regardless of the ultimate fate of Libra, the advent of the plan underscores the Federal Reserve’s demand for real-time payments and the need for action.