Discussion on slave refugee camps during the war. Watch American History tv tonight at 8 00 p. M. Eastern on cspan 3. This past june, facebook announced plans for its own crypto currency called libra. The cocreator of Libra David Marcus answered lawmakers concerned over the Digital Currency before the Senate Banking committee. This is about 2 1 2 hours. This hearing will come to order. Today we will receive testimony from david marcus, head of libra at facebook. On may 9, senator brown and i sent a letter to facebook shortly after it was reported that the company was recruiting Financial Institutions and online merchants to help launch a cryptocurrency based Payment System using its social network. Our letter asked facebook for more information about how the system would work. Its access to and use of Consumer Financial information, and facebooks access to and use of information on individuals or groups of individuals in credit, insure, employment or housing. I appreciate facebooks response last week. Shortly after the letter was sent, facebook formally announce ds its intention to launch the Payment System libra and issued a white paper providing some information about the project. Since then, u. S. And Global Regulators have taken notice, including the Federal Reserve, uks financial conduct authority, Financial Stability board, g7 and others. Last week during the Federal Reserve semi annual Monetary Policy report to congress, chairman powell raised concerns about the cryptocurrencys potential for inciting Money Laundering and financial instability problems and also expressed concern over customers privacy. Yesterday secretary mnuchin stated the Treasury Department has serious concerns that it could be misused by money launderers and terrorist financiers. The bank of England Governor Mark carney said libra if achieves ambitions would be systemically important. As such it would have to meet the highest standards of prudential regulation and Consumer Protection. It must address Money Laundering, Data Protection and operational resilience. Concerns including but are in no way limited to how the Payment System will work, how it will be managed and how libra, the Libra Association, ca libra and facebook all interact. What Consumer Protections will apply and potential implications for consumers with respect to financial loss from fraud or the projects failure. How individuals data will be protected and how individuals privacy will be preserved. How the libra ecosystem interacted with the bank and other existing Money Laundering protections. And the steps that could be taken preemptively to mitigate risks. Despite uncertainties facebook stated goals for the Payment System are commendable. According to the world bank, 1. 7 billion adults remain unbanked. But two thirds of them own a mobile phone or otherwise have access to the internet. If done right, facebooks efforts to leverage existing and evolving technology and make innovative improvements to traditional and nontraditional Payment Systems could deliver material benefits such as expanding access to the Financial System for the underbanked and providing cheaper and faster payments. Still, libra is based on a relatively new and continuing evolving technology in which its not entirely clear how existing laws and regulations apply. Im particularly interested in its implications for the protection and privacy of individuals data. Facebook has massive reach and influence within society with over 2 billion active monthly users and access to vast amounts of personal information, including that which is received directly from users and information that can be derived from their behavior, both on and off of facebook. Libra and ka libra will only expand the reach by increasing examiners on facebook, inc, platforms. This raises several questions. The Banking Committee has held hearings on data privacy including as it pertains to the European Union general Data Protection regulation, data brokers and the fair credit reporting act. Given the significant amount of user information already held by the largest social media platforms, and the prospect of gaining more Financial InformationCongress Needs to give individuals real control over their data. Europe has already done this by imposing obligations on companies and establishing rights for individuals with respect to their data. We need to establish similar obligations for data collectors, brokers and users. And implement an enforcement system to ensure the collection process is not abused and that data is adequately protected. Individuals are the rightful owners of their data. They should be granted a certain set of privacy rights and the ability to protect those rights through informed consent, including full disclosure of the data that is being gathered and how its being used. Regulations should be clear and understandable for both collectors and consumers and should not punish those who opt out of collection practices. Individuals should also have the ability to review their duty, correct inaccuracies, and have ample opportunity to opt out of it being shared or sold for marketing appear other purposes. Chairman powell also said last week that the privacy rules that we apply to banks we have no authority to apply to facebook or libra. He added that we may even need to create a new regulator to address such issues. As we determine the next steps, what is clear is the importance that financial innovation happen here in america. In this way, the libra announcement has heightened the need for policy makers and regulators to establish clear rules of the road. During this hearing i look forward to hearing more about facebooks project, the steps it plans to take and has taken with regulators to ensure compliance with all laws and regulations, and how it intends to ensure individuals privacy is maintained and information is protected. Senator brown. Thank you, mr. Chairman. Facebook is dangerous. Now, facebook might not intend to be dangerous, but surely they dont respect the power of the technologies they are playing with, like a toddler who has gotten his hands on a book of matches. Facebook has burned down the house over and over and called every arson a learning experience. Facebook has two competing missions, make the world more open and connected within make a lot of money. And as facebook attempts to serve both missions they wreak havoc on the rest of us. Look at its version of disrupting the newspaper industry. Facebook has made it easier to share what you are reading with friends. The same time, facebook is redirecting most of the media industrys profits away from actual journalists and into its own coffers. They have done it without the benefit of recreating a local news desk, without conducting the hard nosed journalism that keeps politicians in businesses honest and without meeting even the most basic journalistic standards. This kind of creative disruption that doesnt create anything is just disruption. A look at the impact facebooks profit motive had on the way it connects people. Facebook and other Tech Companies will tell you the internet just holds up a mirror to society and reflects what we already are. But thats not true. To be profitable facebook has juiced its algorithm to hold up a magnifying glass to society rather than a mirror, kind of like the way i learned in boy scouts to use a magnifying glass to burn a hole in a piece of wood. Concentrating on divisive issues pushing controversial opinions to the top of the news feeds usually those are posts that play on peoples fear and worst impulses but they may not be based on any sort of fact. Facebook does all it can to manipulate its billions of users so it direct our ads, our eyes towards their ads and turn an even big are profit. I dont have to tell you what amp llifying our divisions has done to discourse in our country not just between political parties. I bet half of the people in this room had to block an Old High School classmate or even a Family Member on facebook. A look around the world, more troubling. A u. N. Report detailed how facebook was used to spread propaganda in myanmar that led to genocide. In the first month of violence, more than 600,000 people of the rohingya were killkilled, more 700,000 people had to flee the country. They created an algorithm that intensified it. Its hard to remember a World Without facebook. Its hard to remember a time we told our kids to be careful what you do on the internet because its wont go away. What happens online has consequences offline. Its just common sense. Thats why its so hard for us to understand why facebookcompr its actions have real world consequences. They dont seem to understand that the topic of todays hearings has been met with such fierce opposition. Mark zuckerberg has said that facebook might be more like a government than it is a company, but no one elected Mark Zuckerberg. In what kind of dystopian government wants to turn families and friends against each other rather than bring people together. Mr. Zuckerberg and his executives have proven over and over that they dont understand governing or accountability. Theyre not running a government. Theyre running a for profit laboratory. No facebook executives to my knowledge have been harmed by facebooks experiments. Look what has happened everywhere that facebook has run its social experiments on us. Their motto has been move fast and break things. They certainly have. They moved fast and broke our political discourse. They moved fast and broke journalism. They moved fast and incited a genocide. They moved fast and are undermining our democracy. Now theyre asking people to trust them with their hard earned paychecks. It takes a breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next, lets run our own bank and our own for profit version of the Federal Reserve and lets do it for the whole world. I understand that given the financial crisis and given the massive inequality and unfairness to workers in our country and given the fact that so many in this body have forgotten what happened ten years ago. Its tempting to think anyone can do a better job than the wall street mega banks but the last thing we need is to concentrate even more power in constitutions. Wed be crazy to give facebook a chance to experiment with peoples Bank Accounts to use powerful tools they dont understand like Monetary Policy to jeopardize hard working americans ability to provide for their family. This is a recipe for more Corporate Power over markets and consumers and fewer and fewer protections for my constituents. We will now proceed with your testimony. Mr. Marcus, you may proceed. Thank you, chairman. Chairman, Ranking Member and members of the committee, thank you for the opportunity to appear before you today. My name is david marcus. Im the head of ka libra at facebook. For most of my life ive been an entrepreneur Building Products aimed at improving peoples lives. For many years my focus has been Financial Services. I became paypals president and moved to facebook. In my written testimony i described the medicare anychani libra. Im optimistic about what libra can offer the world. I want to make clear that we recognize were only at the beginning of the journey. Chairman powell has said publicly that the process for launching libra needs to be patient and thorough rather than a sprint to implement take. Secretary mnuchin reinforced those views yesterday. We strongly agree with both of them. We will take the time to get this right. We expect the review of libra to be among the most extensive ever. We are fully committed to working with leg latregulators d around the world. Facebook will not offer the libra Digital Currency until we have fully addressed regulators concerns and received appropriate approvals. Libra is intended to address an important problem. Imagine a daughter who wants to send money home to her mom in another country. Of the 200 she sends 4s on 1 be lost because of fees. It can take a week to send the money, a delay which can be disastrous in an emergency. But it doesnt have to be that way. Wouldnt it be easier and safer if people could securely and inexpensively receive money transfers through their smart phones just like they do for so many other things today. Thats what libra is about, developing a safe, secure and low cost way for people to officially move money around the world. Facebook and 27 other organizations have founded the independent Libra Association. These include companies and the payments, technology, telecommunications, blockchain and Venture Capital industries along with staff from the Libra Association. The Libra Association will govern the Libra Blockchain network and administer the libra reserve. It will prioritize privacy and Consumer Protection and implement safeguards that require Service Providers in the Libra Network to fight Money Laundering, Terrorism Financing and other financial crime. We expect these safeguards will at least meet, if not exceed existing standards and improve the integrity of the global Financial System. When fully formed, we expect the Libra Association to include 100 diverse members. Facebook will only have one vote and will not be in a position to control the association, nor will facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with Monetary Policy. In fact, the Libra Association will work with the Federal Reserve and other Central Banks to minimize the risk of any competition with their currency or monetary policies. Finally, i would like to turn to facebooks role in establishing and realizing the potential of libra. To facilitate libras use, facebook has established a s subsidiary known as ka libra. Using the wallet, consumers will be able to save, spend and send libra right from their smart phone. If this is successful, facebook will benefit from more commerce across the family of apps. Ka libra will be affordable and accessible and will also be safe and secure with strong safeguards to protect users accounts and information. We expect the ka libra wallet will be governed by rules. It will also be regulated by state financial regulators. Ka libra is committed to protecting the privacy of its customers. The ka libra wallet will not share individual Customer Data with the Libra Association or facebook except for limited circumstances. Im proud to have initiated this effort here in the United States. I believe that if america doesnt lead innovation in Digital Currency and payments area, others will. If our country fails to act, we could soon see a Digital Currency by others whose values are dramatically different than ours. Libra can provide an opportunity for leadership consistent with our shared values. I look forward to answering your questions, mr. Chairman. Thank you very much, mr. Marcus. Im going to start out with the question. You anticipated my question, actually, at the beginning of your statement. With regard to jurisdiction, frankly, and the regulatory rules of the road, it seems to me that Digital Technology innovations like this may be inevitable and could be beneficial. I also believe that the United States should lead in developing what the rules of the road should be. Youve already indicated your awareness of secretary mnuchins remarks yesterday, statement that chairman powell gave in responses to this committee when he was before us just a week or so ago and other concerns that have been raised by federal regulators. By setting up libra in geneva, switzerland, it makes me wonder whether the rules of the road and supervisory oversight will be focused more on the swiss Financial Market supervisory authority. Youve stated in your testimony that facebook will not offer libra Digital Currency until