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Facebook Libra cryptocurrency faced with central bank warnings

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In this photo illustration, a visual representation of a digital cryptocurrency coin sits on display in front of a Facebook logo on June 17, 2019 in Paris, France.

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Facebook will find itself dealing with plenty of regulatory questions about its new cryptocurrency, central bankers around the world said Thursday.

The social network detailed plans for its virtual currency, called Libra, earlier this week, a move that almost instantly provoked a reaction from politicians and regulators alike.

France’s Finance Minister Bruno Le Maire warned against Facebook’s crypto becoming a “sovereign currency,” hours after Facebook’s announcement, while a German politician called the company a “shadow bank.”

Meanwhile, the U.S. Senate Banking Committee recently called on the tech giant to join a hearing on its ambitions to create a virtual currency.

Now, several central bankers are also weighing in on the debate.

“I think there’s a lot of water to flow under the bridge before Facebook’s proposal becomes something that we’re using all the time,” Reserve Bank of Australia Governor Philip Lowe said at a press conference Thursday.

“There are a lot of regulatory issues that need to be addressed, and they’ve got to make sure there’s a solid business case.”

What is Libra?

Facebook’s token will take the form of a stablecoin, a digital currency that’s asset-backed — usually by currencies like the dollar — to avoid the volatility seen in most cryptocurrencies. In Facebook’s case, the currency is backed by a basket of bank deposits and short-term government securities.

Libra is being overseen by a wide consortium of firms ranging from payments companies like Visa and Mastercard to tech giants like eBay and Uber. It’s set to launch in 2020.

Experts have said that, while Facebook’s crypto project is a good sign for the industry, potentially driving more adoption, regulation could be a key hurdle for the venture.

“It does seem clear that something like this could be very important from a regulatory point of view,” said Bank of England Deputy Governor Sam Woods, quoted by Reuters news agency.

Mark Carney, the U.K. central bank’s governor, had already said earlier this week that Facebook’s crypto project should expect to face the “highest standards of regulations.”

Indonesia’s central bank reportedly also commented on the matter of Facebook’s token Thursday, saying the company’s plans should be reviewed.

‘High expectations’

Federal Reserve Chairman Jerome Powell, meanwhile, said Wednesday that he had spoken to Facebook about Libra. Powell said the Fed will have “high expectations” for the currency in terms of how safe it is and whether it complies with financial laws.

“I have no doubt that there will have been regulatory discussions or some kind of ‘pre-approval’ going on behind the scenes,” Andy Bryant, co-head of cryptocurrency exchange bitFlyer’s European business, told CNBC by email.

“Of course, there will be plenty of areas where we can expect that regulators will ask for further clarity – which has evidently started happening already — however Facebook’s team will no doubt be fully prepared for this.”

The world’s best-known cryptocurrency, bitcoin, was created with the aim of taking financial institutions out of the picture. It’s faced plenty of regulatory questions, particularly due to its use in illegal transactions and speculative trading.

Jeff Sloan, the CEO of U.S. payments firm Global Payments, said regulatory oversight for Libra would be a welcome sign.

“At the end of the day, it’s important for consumers to have confidence in the systems in which we operate,” he told CNBC’s “Squawk Box Europe. “

“We’re already highly regulated, so we welcome more prudent regulation, and we welcome a level playing field where our competitors are in the same way.”

Given that Facebook is working with established players like Visa and Mastercard, it has the benefit of having partners that are experienced in dealing with existing regulations, Sloan said.

In response to concerns about regulation, Facebook previously said it looks forward to addressing policymakers’ questions on the cryptocurrency plans.

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Sterling jumps as Brexit Party’s Farage says he will not challenge Conservative seats at election

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Nigel Farage at the Brexit Party’s General Election campaign launch at the Emmanuel Centre in Westminster, London.

Stefan Rousseau – PA Images | PA Images | Getty Images

Sterling has risen sharply after Nigel Farage said his Brexit Party will not contest any of the 317 seats won by the ruling Conservative Party at the last election.

Farage said his party will fight all the other seats held by the main-opposition Labour and other pro-Remain parties. The move by the Brexit Party leader gives the Conservatives a big boost in their attempt to increase their majority at the upcoming election.

According to Reuters data, sterling rose 0.6% after Farage’s announcement to sit at $1.2859.

The Brexit Party leader had previously threatened to contest almost all the U.K.’s Parliamentary seats in a move that could have split the “pro-leave” vote in the December 12 U.K. general election which is seen by some as a de facto vote on Brexit.

Farage had previously offered to enter into a “leave alliance” with the Conservatives in which certain seats were contested but Downing Street had refused to entertain such an offer.

Farage attributed his decision to give the Conservatives a “free run” in certain seats to comments made by U.K. Prime Minister Boris Johnson on Sunday night, where he claimed that there would be no extension of the Brexit transition period which ends in December 2020. 

This is a breaking news story. Please check back for details.

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Woody Allen and Amazon settle legal battle over canceled movie deal

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Movie director Woody Allen and Amazon‘s content arm have settled a $68 million legal battle after the U.S. company canceled a contract at the start of this year.

Allen sued Amazon for allegedly breaching the four-picture deal, which was to “finance and distribute his future films and to be his ‘home’ for the rest of his career,” according to the suit, filed in February.

But in papers filed Friday, the two parties agreed the case should be dismissed, according to an AP report. Terms were not disclosed.

Allen alleged that he had completed the movie “A Rainy Day in New York,” and spent more than $20 million in doing so before Amazon canceled its release and shelved a deal for three more movies, according to the suit.

Allen’s suit said that Amazon had backed out of the deals because of “a 25-year old, baseless allegation against Mr Allen, but that allegation was already well known to Amazon (and the public) before Amazon entered into four separate deals with Mr Allen.” Allen’s daughter Dylan Farrow accused her father of molesting her in an attic in 1992 when she was 7 years old, an allegation Allen has repeatedly denied.

In April, Amazon’s attorney Robert Klieger said that Allen’s comments about the #MeToo movement breached the deal, citing a magazine article in which he stated: “You don’t want it to lead to a witch-hunt atmosphere, a Salem atmosphere, where every guy in an office who winks at a woman is suddenly having to call a lawyer to defend himself.”

Allen’s company, Gravier Productions, got an international release for “A Rainy Day in New York,” including France, Italy and Hong Kong.

Representatives for Amazon and Allen had not responded to CNBC’s request for comment at the time of publication.

  • CNBC’s Sara Salinas contributed to this report

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ECB’s Benoit Coeure to lead central bank effort on digital currencies

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Benoit Coeure

Jason Alden | Bloomberg | Getty Images

Outgoing European Central Bank (ECB) executive board member Benoit Coeure will lead a new unit at the Bank of International Settlements (BIS) focused on financial technology like digital currencies, the group announced Monday.

Coeure was tapped to run the BIS’ new “Innovation Hub,” which was set up earlier this year to understand how technology is affecting central banks around the world. The effort comes as big tech companies like Facebook and Apple are expanding rapidly into financial services.

The BIS, known as the central bank of central banks, is based in Basel, Switzerland. It is owned by 60 central banks including the U.S. Federal Reserve, the ECB and the People’s Bank of China.

“I look forward to bringing my expertise to the global central banking community at this time of rapid technological change,” Coeure said in a press release Monday. “We must make the best use of innovation to support financial stability and promote financial inclusion.”

Coeure has served as a member of the ECB’s executive board since 2012, where he was in charge of market infrastructure and payments and the oversight of payment systems. The French economist also led the Group of Seven working group on stablecoins and has been a leading voice on how technology is shaping the world’s payments infrastructure.

In a speech in September, Coeure said Facebook’s proposed cryptocurrency project called libra has been a “wake-up call” for central banks around the world.

“The demand for fast, reliable and cheap cross-border payments is bound to grow further in coming years,” he said. “Policymakers and central banks should respond to these challenges.”

Lawmakers, policymakers and regulators around the world have piled on criticism of libra citing risks like financial stability, money laundering, terrorism financing and data privacy. Some EU officials have vowed to block the effort entirely saying a stablecoin backed by a consortium of companies puts sovereign currencies at risk. The goal of the cryptocurrency project, according to Facebook and the non-profit Libra Association overseeing its rollout, is to provide a faster, easier payments for users around the world.

Coeure’s eight-year term at the ECB expires December 31, and he will begin the new role at the BIS January 15, 2020, the group said.

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