Bank of England welcomes Facebook Libra currency

20 June 2019, 17:28 | Updated: 20 June 2019, 18:24

Mark Carney has issued an unexpectedly warm welcome to Facebook’s new global currency, saying tech companies and non-banks could soon be given access to the Bank of England’s balance sheet, affording them the same privileges as the big banks.

The Bank's Governor said that Libra, the digital currency Facebook unveiled earlier this week, could "substantially improve financial inclusion and dramatically lower the cost of domestic and cross-border payments."

But he said that he approached the currency "with an open mind but not an open door."

In what is likely to be his last Mansion House speech, Mr Carney said that in future non-banks could be allowed access to the Bank's balance sheet, allowing them to park money at Threadneedle Street overnight and potentially even borrow from the central bank.

This access is, at present, only accorded to registered banks, but Mr Carney said extending this access "can improve the transmission of monetary policy and increase competition."

While the decision remains subject to consultation, it will be seen as a major signal, indicating that the Bank endorses the growing competition between established banks and giant tech companies attempting to muscle in on the sector.

Facebook announced its Libra currency earlier this week, while Apple recently announced the launch of its own credit card.

Mr Carney also announced that in future, the Bank's Financial Policy Committee would stress test the financial system for the potential impact of climate change.

He said: "The stress test will reveal the UK financial system's ability to withstand the financial risks from climate change that arise from the increased frequency of weather events and from the transition to a carbon-neutral emission economy.