Facebook Can't Be Trusted. Regulators Are Unprepared.

Facebook cannot be trusted to create a private, global currency and U.S. and global regulators are not prepared if it does, Public Citizen President Robert Weissman said today at the U.S. House Financial Services Committee's hearing on Facebook's Libra proposal.

"The successful launch of a private, global currency tied to Facebook - the dominant firm in social media with more than two billion users - portends grave risks for the global economy, financial stability, efforts to control illicit money flows, market competition and consumer well-being," Weissman told lawmakers.

He explained that Facebook's proposal:

• Is overwhelmingly likely to extend and deepen Facebook's dominance in social media, hurting competition;
• Would become systemically important, but without the controls on financial institutions designed to protect against systemic risk;
• Could make the corporations a corporate surveillance leviathan and give the company dramatically enhanced power over information flows and our economy;
• Threatens nations' ability to maintain their own monetary policy and to take measures to address currency crises; and
• Will lead to tax cheats, organized criminal enterprises, money launderers and others rushing to take advantage of the system.

Facebook also cannot be trusted to obey its voluntary monetary and privacy commitments, Weissman said, as it has constantly changed its privacy policies and recently reached a record $5 billion settlement with the Federal Trade Commission.

"This is not a corporation that should get the benefit of the doubt. It is definitely not a corporation on whose promises the nation and world should gamble with global financial stability, consumer protection, anti-money laundering efforts and more," Weissman added. "The combination of detailed transactional data involving hundreds of millions of people with Facebook's already expansive data on billions of users' likes, personal preferences and intimate thoughts threatens to create a corporate surveillance leviathan with no precedent outside the realm of science fiction."

Read the full testimony here.