President Donald Trump added his voice Friday to a growing list of regulators and lawmakers who are concerned with Facebook Inc.'s (FB - Get Report) plans to launch a global digital currency that could challenge U.S. dollar hegemony and put financial stability at risk.
Trump said Facebook's planned digital coin, known as Libra, would have "little stand or dependability" and suggested the social media company might need to obtain a banking charter in order to move into offering financial services on its platform. Trump also blasted bitcoin, the world's most popular cryptocurrency, and said unregulated coins could "facilitate unlawful behavior" such as drug trafficking.
....Similarly, Facebook Libra's "virtual currency" will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National...— Donald J. Trump (@realDonaldTrump) July 12, 2019
...and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!— Donald J. Trump (@realDonaldTrump) July 12, 2019
Trump's comments appeared to have little impact on either Facebook shares, which edged 0.8% lower at the opening bell to change hands at $199.64 each, or bitcoin itself, which added 2.5% to trade at $11,723 each on the Coindesk platform.
His views, however, echo concerns from both Federal Reserve Chairman Jerome Powell, who told lawmakers on Capitol Hill yesterday that the Libra launch is expected to be a major topic of discussion for G7 finance ministers and central bankers when they meet next month in France.
Bank of England Governor Mark Carney, who also chairs the international Financial Stability Board, told reporters Thursday that Facebook would need to demonstrate that Libra is "rock solid" before it could launch in the United Kingdom.
"If you are a systemic payment system, you have to be on all the time. You can't have teething issues, you can't have people losing money out of their wallets," Carney said during a press event in London. "This is not learning on the job stuff, it's got to be rock solid right from the start or it's not going to start."
Facebook revealed its plans for the digital currency last month with a so-called white paper from the Libra Association, a group of 28 business partners working through a group that will be based in Geneva, Switzerland and will administer the global "stable coin".
The coins will be held by users in digital wallet called Calibra, which will be connected to Facebook's two messaging platforms -- WhatsApp and Messenger -- and will be backed by a basket of global fiat currencies and "offer better, cheaper, and open financial services".
"This approach is similar to how other currencies were introduced in the past: to help instill trust in a new currency and gain widespread adoption during its infancy, it was guaranteed that a country's notes could be traded in for real assets, such as gold," the companies said.
"Instead of backing Libra with gold, though, it will be backed by a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks."