1 . 2. 1 . Ericsson right now is down more than 10 . It as well giving a sober picture of asia, saying that it may be a little bit too optimistic on profitability 2020. S for back to the main story in the United States, bank of america with record secondquarter earnings on the Interest Income despite a beat on trading revenues. Bank of america following peers lower. Here with more is the gentleman owner and finance reporter. Stocks are up, clearly not disappointing too much, but a net interest margin. The stock is up i think because the trading results are good. Fixed income trading revenue is unchanged from a quarter of the year ago and that is surprising because all of the other banks that have reported, the big banks including goldman, they had sizable declines in fixed income trading. Bank of america held on to its revenue and thats a good sign. Equities is down but sort of almost everybodys was down. So that matters just as much for these big banks in the u. S. Is what happens on the environment side with the consumers and companies. There we knew that net Interest Income would be under pressure because Interest Rates are has signaled it will cut rates, longterm yields have already dropped because of that signaling. So the numbers there may be didnt shock people as much and they were expecting it, but the surprise was fixed income trading and that was good. Debt issuance, do we expect to see the continuing . As it falls it should help. That is one of the things. Banksrginal decline for when rates fall, because they cannot charge as much for the lending of the borrowing, its pretty much at the bottom anyways. Deposit rates are very low. But as rates drop consumers and companies should borrow more. So in three, volume should go up. As volume goes up that should help the net Interest Income from that level. Vonnie what is the banks read from where we are on the credit cycle, any information on where the bank thinks we are healthwise . They were positive on the bad loans and stuff and most of the numbers we have been seeing in the last few days, bad loans are not going up. Mostly provisions are actually declining. So its a very benign environment. Things are not really picking up. Even if they are its a very know, for someou companies. But mostly we are still doing pretty good end of Interest Rates are up its not really going to hurt them this cycle. We are not going to start seeing rising defaults. Of the we are at the end major investment banks reporting. What will have been the take away from the whole lot of reports . Really have Morgan Stanley left tomorrow. The u. S. Picture is that trading is softening. There isnt as much trading activity in world markets. That kind of hurts their income on the one hand. On Interesting Companies is dropping, but meanwhile they are still able to grow loans. Not such that they did in previous years, but they are still growing loans and if they couldow the more, they probably still grow profits. But if you look at the numbers, there are still record profits as you said with bank of america. U. S. Banks can still grow to profit from the revenue. So, shrinking margins, shanking trade revenue. Its all growth slowing but it is not really equipped to not making as much money or shrink profits. They are still growing. We got comments on europe as well. In europe things are not as good, the economy is not is much tougher, the ecb will be cutting rates in the markets there are you know, they are not as healthy as the u. S. Markets have been. So there the business for the banks, it seems much tougher and that trend is continuing as the economy in europe looks softer and, whether the ecb rates will help with that is not that clear. All right, thank you for that, Bloomberg Finance specialist. First word news here. Construction in the u. S. Fell for a second month in a row. President ial residential stocks declined 9 10 of 1 and a drop in apartment buildings outweighed the pickup and singlefamily homes, signaling that the housing sector is relatively stable. House Speaker Nancy Pelosi says she sees Forward Motion after treasurys with secretary Steven Mnuchin and on raising the debt limit. Pelosi is trying to negotiate higher spending levels in a budget deal that she wants to attach. A budget breakthrough could depend on the funds to veteran health. John paul stevens has died, he was 99. He was nominated to the Supreme Court by republican president gerald ford in 1975. He became the anchor of the liberal wing and retired in 2000 10 as the Supreme Court second oldest justice ever. On capitol hill republicans called the measure harassment. Some democrats say the party isnt going far enough. Thats the reaction after the house voted to condemn President Trump for comments that have been criticized as racist. Several republicans voted for the resolution. Global news 24 hours per day on air and on tictoc and twitter, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Vonnie thank you. Live pictures now of the hearing room where david marks will be testifying for the second day on capitol hill this time before the House Financial Services committee. Isresentative Maxine Waters seated. Committee seats look half full about now, were waiting for more representatives to enter the room and we will take you to it live when it happens. Right now facebook is down about 1 10 of 1 . All told markets are just sort of finding their footing here in the first 40 minutes of trading or so in the u. S. This is bloomberg. Live from new york, im vonnie quinn. This is bloomberg markets. It is day two of david marcus appearing on capitol hill from facebook. Talking the cryptocurrency libre and calibra. See whatatch to representatives say. Its about half full right now. Maxine waters is waiting for some colleagues to enter the room. Gary gensler will also be testifying today after david marcus, hes the chair of the Commodity Futures Trading Commission and he has gone up against wall street from time to time. It will be interesting to see what has say. So, while we are waiting for that to begin, lets get a check on the markets right now with abigail doolittle. Abigail not much conviction from investors. Very small moves, the nasdaq was slightly higher moments ago, but you can see now its barely moving at this point to the downside. Europe, stoxx 600 is down slightly, for fractionally, and the shanghai composite in the asian section is down for a second day. Really small moves here, making it perhaps see more perhaps seem more risk off, also true for the german bund take a look at the major intraday chart, down five basis points, its pretty extraordinary. Of course the other extraordinary story here is that it is a negative yield at this point, 29 basis points to the downside, investors paying the German Government to park their money. But this is having an influence on the sector competition for the stoxx 600. Ands go into the bloomberg take a look. First of all, you see an even split for the sector that is neutral but on the downside Energy Financials and materials are down and a big way, down 1. 8 and the leading sectors are the more offensive sectors, including real estate, consumer staples, utilities. All of those sectors yielding higher dividends when rates are lower as the german bund certainly is. Here in the u. S. Lets take a look at some of the big earnings movers. Taking a look at bank of america, those shares at this point solidly higher, welloff the premarket lows. Investors initially reacting to the net Interest Income that missed estimates and growth for the area taken lower on the year , trading businesses lower. Some of the other big banks, the Consumer Banking unit was strong, investors cheering bank. F new york mellon up 2. 6 its interesting that the ceo of that company mentioned that the shape and level of the yield curve hurt the results, but nonetheless they pulled out a good quarter for csx. Take a look at that railroad company, those shares down 10 , the outlook not really hitting the mark, taking the sector lower, causing some to wonder if there is a recession ahead for the railroads. Vonnie exactly. And it might have a bit of a halo effect on some of the other transports as well. Thank you for that. Germanys ursula von der leyen will be the new president of the european commission. She was given less support than predecessors but will be succeeding jan paul juncker. We spoke to her after she was elected. We should never forget that we are allies and friends. We sit on the same side of the table and i prefer it that way. Therefore we have got to negotiate hard about different topics that have to be fought. But in the very end we know its better to be in an intensive, healthy way trading with each other. Therefore it will work hard to have a Good Relationship with our partner, the United States. Ursula von der leyen there. Taking you to capitol hill, its day number 24 facebooks david marcus in front of lawmakers, the House Financial Services committee and chairman seen waters. Partners too enlist expand its reach, like mastercard, paypal, visa, uber, lift, and spot a five. Facebook is apparently trying to create a new Global Financial system that is intended to rival the u. S. Dollar. This venture is slated to be based in switzerland, which has a history of being a monetary haven for criminals and shady corporations. Facebooks plans raise serious and securityng Monetary Policy concerns, not over 2 billion users who will have immediate access to these products, but also for consumers, investors, and the global economy. In addition, facebook has libre tokens being backed by government currencies and government guaranteed securities, holding them in a socalled libre reserve to be governed by facebook and its partners. Ownership of government assets on such a massive scale, without proper oversight, threatens to concentrate government influence in the hands of a few elites. If facebooks plans come to fruition, the company and its partners will yield immense economic power and they could destabilize currency, currencies like government. Facebooks reposed interest into Financial Services is all the more troubling because it has already harmed vast numbers of people on a scale similar to wells fargo, demonstrating a pattern of failing to keep consumer data private on a scale similar to equifax. A 2011k remains under Consent Order from the federal trade commission for deceiving consumers and failing to keep consumer data private. In the wake of the cambridge analytical scandal in which facebook provided 50 million users data to a Political Consulting firm, the company will reportedly pay a record 5 billion fine to the ftc data privacy failures. In addition, facebook has allegedly stored user passwords dating back to 2012. Paid unsuspecting t late teenagers to download spyware, experienced a hack of nearly 50 million accounts and experienced a software bug that granted thirdparty access to 6. 8 million users photos. They have also been sued by hud and civil Rights Groups for violations of the Fair Housing Act in what amounts to modernday redlining. Facebook also allowed malicious russian state actors to purchase and target ads in a campaign to influence the 2016 election. Also concerned about the lack of diversity in facebooks upper ranks. Women and minority owned businesses may be excluded from participating fully. In light of these and other concerns, my colleagues and i wrote to facebook earlier this month to call on it to cease implementation of its plans until regulators and congress can examine the issues associated with a Large Technology company developing a Digital Currency and take action. The independent Community Bankers of america and others support this commonsense step. Facebooks plans also raise big techncerns about expansion into Financial Services as it appears to inappropriately mix commerce and banking activities. So today we will discuss a draft bill to keep big tech out of , preventing large platform utilities like facebook from becoming Financial Institutions and blocking them from creating their own currencies. Todays hearing is only the first step in our oversight and legislative process and i look forward to hearing from our witnesses. The chair now recognizes the Ranking Member of the committee, the gentleman from north carolina, mr. Mchenry, for five minutes for an opening statement. Beyond theere to go headlines, here to sift through the speculation and the hearsay. One of my favorite headlines is is facebook forming a crypto members the foundation boost each others businesses . Washington must go beyond the hype to make sure its not the place where innovation goes to die. Just because we may not fully understand a new Technology Proposal does not mean that we should immediately call for its prohibition. Especially when the proposal is just that, a proposal. But lets face it, lets be honest, its facebook. Nd im skeptical but we can either make you a political talking point or we can choose to conduct thoughtful governmental oversight. Day,s my hope for this thoughtful governmental oversight. The reality is, whether facebook is involved or not, changes here. Digital currencies exist. Israel. Ain technology and facebooks entry into this new world is just confirmation. Albeit scale. Knock on moto, author of the Bitcoin White paper envisioned and that others are building is an unstoppable force. We should not attempt to deter this innovation. And governments cannot stop this innovation. Those that have tried have already failed. The question then becomes what are american policymakers going to do to meet the challenges . And the opportunities of this new worlds of innovation. Some politicians want us to live in a permissionbased society. Where you need to come to government, ask for its blessing before you can even begin to think about innovating. Those are the politicians that would rather kill it before it grows. There are others who believe in the vibrancy of american ingenuity, american innovation. They recognize that our economy is else off of generations of entrepreneurs and innovators through competition, through testing, to tinkering, through iterating, and they got us here today. To be clear, its not about advocating for a break it and figure it out later approach, but when it comes to finances we must ensure that consumers and investors are protected. So, mr. Marcus, lets get to work, lets have the conversation. Lets answer those questions. Instead of a kneejerk reaction of banning something before it begins, my republican colleagues and i want to first try and understand. In turn, based what we learn on whether or not our current Regulatory Framework meets the demands of this new technology. That is why we are here today. No, i dont have crystal ball. Whether its lower remittance costs that have the opportunity or would mean families could send money to each other more cheaply and easily than today, shootit is just a ploy to facebooks twitter mentions through the roof. We will see. What i do know is that republicans stand with innovators to successfully innovate responsible technology here in the United States and domestically before we lose out to other countries around the world. I asked my colleagues on both sides of the aisle to join together in supporting innovation, ingenuity, and the entrepreneurial spirit that this nation was founded upon. Im grateful for this hearing and i call on chairman waters i called on chairman waters to have this hearing a month ago and its a bipartisan approach to oversight. With that i would like to yield the balance of my time to mr. Hill. I think the Ranking Member. We are looking at critical areas within our committee. Innovation, oversight questions related to the use of an trading of cryptocurrencies at the intersections of Financial Services and big data. We must ensure that we are asking thoughtful questions as we learn about and analyze these rapidly emerging trends. As a former conservative anchor i understand the importance with appropriate regulations and balance to the benefit of American Consumers. As lawmakers we all need to make sure that all the companies that operate here in america with American Consumers are in full compliance of those laws. America is evolving into a digital era and we need to make sure that we are asking the right questions. I would urge my colleagues to always trust, but verify. I yield back. Have two and panels, i want to welcome my first witness, chief ivester chief executive officer of calibra, david marcus. He identifies himself as working for facebook. Prior to calibra, mr. Marcus explored blockchain and served as Vice President for messaging products for facebook. He has also served as president of paypal and other large companies. Mr. Marcus, without objection, your written statement will be made a part of the record. You will have five minutes to summarize your testimony. When you have one minute remaining a yellow light would appear and at that time i would ask you to wrap up your testimony so that we can be respectful of the Committee Members time and others. You are now recognized for five minutes to present your oral testimony. Thank you, share what. Ranking members of the committee, thank you for the opportunity to appear before you today. My name is david marcus and im the head of calibra and facebook. Ive been an entrepreneur aimed at Building Products that improve peoples lives for many years. I became the president of paypal after i acquired my last start up and i moved to facebook years ago to run messenger and lead the blockchain efforts. In my written testimony i described the mechanics of libra. Today i want to expand by im optimistic about what it can offer the world. But before i get there, i want to make it clear that we recognize we are only at the beginning of this journey. Federal reserve chairman powell has said publicly that the process for launching libra needs to be patient and thorough rather than sprinting to implementation. Secretary mnuchin reinforced his recent press conference and we strongly agree with both of them. We will take the time to get this right. We expect to review libra as one of the most extensive efforts ever and we are fully committed to working with regulators here and around the world. Chairwoman waters, speaking on behalf of facebook, i pledge to you that facebook will not offer currency untilal we have fully addressed the concerns of regulators and received appropriate approvals. I would like to start by sharing the vision for libra. Its intended to address an important problem. Imagine a daughter who wants to send money to her mother in another country. But of the 200 she sends, 14 will be lost because of fees. This can also take several days or even a week for the money the mother to receive the money, a delay that can prove disastrous. Not to mention that lines may be collection points might be hike crime areas. But it doesnt have to be that way. Would it not be easier and safer if people could safely and securely receive money transfers through their smartphones just like they do for so many other things today . That is what bieber is about, developing a safe, secure, lowcost way for people to efficiently move money around the world. To realize this promise, facebook and 27 other organizations have founded the incentive libra organization, including companies with blockchain and Venture Capital industries and nonprofits like whowomens world banking, are here today along with staff for the association. The Libra Association will govern the Libra Blockchain network and administer the libra reserve and establish the rules of the road and prioritize privacy and Consumer Protections and implement safeguards that require Service Providers within the network to fight moneylaundering, terrorism, and other financial problems. We expect that these safeguards will meet if not exceed existing standards and improve the integrity of the Global Financial system. We expect themed association to include 100 diverse members. Facebook will only have one vote to will not be in a position control the association. Nor will facebook nor the Association Position themselves to compete with sovereign currency and interfere with Monetary Policy. We will in fact work with the Federal Reserve and other Central Banks to minimize the risk with other monetary policies. These are areas properly the province of Central Banks. Finally, i would like to turn to facebooks role in realizing the potential of libra. To facilitate the use of libra, facebook has established aphis subsidiary known as calibra that will offer one of many digital wallets offered on the network and consumers will be able to save and spend right from their smartphones. If this is successful, facebook will benefit from more commerce across the family of apps that it operates. It will be affordable, accessible, safe, and secure, with strong safeguards to protect User Accounts and information. We expect that the wallet will be governed by rules, administered or enforced by the ftc and regulated by state financial regulators. Protectingitted to the privacy of customers and the wallet will not share individual Customer Data with the association or even with facebook except for limited circumstances like preventing fraud and criminal activity. I am excited by the potential that this holds and i am proud that we have initiated this effort here in the United States. I believe that if america does not lead innovation in Digital Currency and damons, others will. If our country fails to act we could soon see a Digital Currency controlled by those whose values are dramatically i look forward to answering your questions. Thank you. I recognize myself are fiveminute for questions. 2. 7marcus, facebooks billion users and trustee with their most intimate thoughts, pictures, feelings, ideas and sensitive information. Yet at every opportunity to demonstrate competence and responsibility facebook has let us down. As already noted, facebook has a long list of scandals, including its repeated failures to safeguard its users data. You said we dont need to trust facebook because it will only be one of 100 members in the liber association that will manage this project. That is not entirely true, is it . The project was facebooks idea. Facebook is spearheading it and recruiting partners. Facebooks subsidiaries, calibra , will provide a digital wallet to store libra tokens. As i understand it, no member of the association has paid anything towards the project. My question is, why should we trust that facebook can do these activities . Thank you, chairwoman. Andink trust is essential it is clear we have made mistakes. I believe we are owning these mistakes and working hard in remedying them and working hard at improving on. Association isa concerned, we have invested everything that has been invested so far in libra, you are right, and we have built all the technology up to this point. But we have also given donated the technology because its now open source for the whole world to be able to use and leverage. As a result, we are not controlling the codebase. By the time we launch we will be one of 100 members with no special privilege. As far as the wallet is concerned, i believe the idea willis that one day we launch and suddenly 2 billion people will arrive on the calibra wallet. This is not the approach we are taking. People will have to open specific libra accounts and cannot use their facebook account. They have to open new accounts. In order for them to do that, they have to upload a government issued id to identify so we can kychere k their requirements. Given his disregard for u. S. Law and its massive scale, i think Foreign Countries could find it difficult to effectively regulate facebook, libra, for calibra. You are saying you said it has never been contacted by facebook about this project about this project. Responded that you would continue to work with but ifors going forward, the regulators lack authority to adequately oversee you, how can you work with them to resolve concerns . Will you stop dancing around this question and commit here in this committee before the duly elected representatives of the American People to a moratorium until congress enacted appropriate Legal Framework to ensure libra and calibra you claim it is intended to do, to serve the publics good. We are all in support of innovation. It is not one side of the l versus another side of the aisle, but if you talk to any member on this committee, they will know nothing about calibra. About howknow nothing it is organized. They know nothing about the role that facebook will play in this Big Association that now has 28 companies and looking to get 100 companies. Despite the fact we all support innovation, we all understand what is important for our economy to grow in for development in the future, of this country we need to be on top and understand something as massive at this as this project. The that, i will turn to gentleman well, if he has time to enter. Please, go right ahead. Chairwoman, i agree with you that this needs to be analyzed, understood in the proper oversight needs to be set up before libra can launch. It is in the spirit we released the white paper very early before any launch so we could have the time to engage with all of the proper regulators and Central Banks and lawmakers to ensure we will get this right. This is my commitment to you, chairwoman. We will take the time to get this right. Thank you very much. The gentleman from north carolina, Ranking Member mr. Mckendry is recognized for five minutes. Mr. Marcus, i read the white paper. I understand the nature of Digital Currency and digital technology. . Hat is a libra congressman, libra is a Digital Currency. A reservebacked Digital Currency. Is that a security . We dont believe it is, congressman. Is a commodity . Based on current u. S. Law, i believe it might be a commodity but we see it as a payment tool. Is it a an Exchange Traded fund . It is not. It is none of the above in any pure form, like other digital currencies, correct . Is designed to be a payment tool. Above inis none of the our current regulatory structure, what im getting at is how does it comply with regulations . Congressman, the way we comply with regulations is in a number of ways. As far as the calibra wallet is concerned, it is registered as a Money Services business with treasury. It is applying it has received a number of state licenses and will operate the same way other wallets operate. As far as i am asking about libra. As far as the Libra Association is concerned, these are active conversations we are having with working groups at a, the swissinm financial regulator. There is tension between the notion of a decentralized currency, or something decentralized and ultimately privacy. And ultimately antimoneylaundering. These things standing in conflict with one another. Very difficult things to resolve. In your white paper, you said after five years there would be a transition point. You would go from a permissioned base to a permissionless system. Post transition, how do you reconcile the need for controls which allow you to comply with any moneylaundering, your customer regulations, with that decentralized notion of a fully decentralized Digital Currency . Thats a very good question. The way this will work is at the association will still have the ability to set the rules when it comes to any moneylaundering programs. Requirements for the network. Even when the Network Transitions to permissionless, without getting lost in the weeds, the vast majority of validators will likely be the ones providing services, likely larger companies. And the nature of the wallet that is how you get to moneylaundering . Know your customer. Not the nature of the Digital Currency . Systemo a permissioned with these 100 two a permissionless system, it will not be in the nature of libra, its in the nature of the wallets on either side . That is correct. The association will have a program and still be under the supervision of getting into that question of any moneylaundering provisions and complying, is your view that you will be Like Western Union . Is it your view you are more like your former employer, paypal . I believe it depends about the entities are talking about as far as the wallets are concerned. It will definitely be more like the paypal type businesses that operates in the payment space. As far as the Libra Association is concerned, that is a conversation we are having. Is it your view that the developer that facebook is for you to be a competitor to alley pay and wepay. A competitor to venom on paypal . Yes, we have a number of wallets that are working with us on the network site but will compete on the wallet side. Bewill that consumer data kept separate are part of the calibra data collector for consumers . Let be part of facebooks overall knowledge of consumers or separate and distinct . We will make strong commitments to keep that data separated from social data. Separate and distinct . Yes. Final question here. If you are seeking to be a competitor to alipay and we chat, why are you doing this in switzerland . Why are you using a basket of currencies . Why not the good old american dollar and to bring down the transaction costs which is seemingly the ultimate goal here . Congressman, i want to say the choice has nothing to do with evading responsibilities of oversight. To goal with switzerland is home the Libra Association and an International Place skip beyond that. That is really why. The second thing is for the same reason we would like for libra to be a digital global currency and as a result to be one unit of a Digital Currency for the whole world. This is why we believe is the right approach. Thank you. The gentlewoman from new york, mrs. Maloney, also the chair for the subcommittee on investor protection, entrepreneurship and Capital Markets is recognized for five and its. Thank you. Mr. Marcus, as you can see there are a lot of questions about this project. It is big and very bold. Some would say it is too bold. The chairman of the Federal Reserve was in here just last week saying he thinks it could be a systemic risk. The former chairman of the cftc is going to testify later that he think this should be covered by the Investment Company act. We have a lot of concerns and a lot of questions. Nod toit that its a the chairwomans question about requesting tomorrow tori him about libra until policymakers can figure out how to handle it. Was that a yes or no to her question . When she called for a moratorium . Congressman, the commitment is that we will not launch until we have addressed all concerns fully. I take that as a no. What i want to ask you will you commit right here in this hearing room to walk before you run . Will you commit to doing a small Pilot Program for libra First Limited to no more than one million users and overseen by the Federal Reserve and the fcc . Ftc . Andhe steps we have taken, this is the reason why we announced the white paper instead of launching and then figuring it out after, which is what happens sometimes with technology products. Most often. In this case we are deliberate about taking the time to get this right. With all due respect that is not what i asked you. Given the lack of trust with people having facebook have in facebook, you have breached the trust of users over and over again. Last week you were fined 5 billion for selling your users private data without their knowledge or permission. I would like to ask you again, will you commit to walking before you run . If you go ahead and launch libra without doing a Pilot Program first, they are too many risks. The libra reserve can be managing too much money, which could make it systemic. Too much money could be pulled out of banks in order to buy libra, which former ftse chair has written about and warned about. The risks are very great. Personally, and this is only my personal belief, i dont think you should launch libra at all. The creation of a new currency is the core government function and should be left a democratically accountable institutions that are accountable to the American People. Least, youvery should do the small Pilot Program first overseen by you and the Federal Reserve and the ftc. I think that is a modest request. What you commit to doing a small Pilot Program first, yes or no . Congresswoman, we will engage with regulators and the working group at the g7 that is notably looking after the issues you are raising to ensure that however responsibly is done and with appropriate oversight and in a very responsible way. You have my commitment on that. Commit towill not testing this out as a Pilot Program first, and i think its a reasonable request, i think congress should seriously consider stopping this project from moving forward. Now, there is a lot of concern about facebook a lot of people think it has become too powerful. It has become a monopoly. Now you were telling us that facebooks digital wallet, libra , called calibra, will be the only wallet they can be embedded into whatsapp an Facebook Messenger. Given how dominant these apps are, it raises serious concerns about market concentration and potentially monopoly concerns. Will you commit to allowing thirdparty wallets on whatsapp and Facebook Messenger . Mayresswoman, name i answer the one point about what you said earlier. I want to address it quick. The Current System is really not working for people and for way too many people. Others are leading and plowing ahead. Would you answer my question . Questions inhe this committee. What you commit to allowing a third party wallet on whatsapp and Facebook Messenger, yes or no . Congresswoman, other wallets will be inoperable with the calibra wallet that will be integrated. Do you believe in competition and Market Access . If you believed in it, you would allow them to be embedded . The ladies time has expired. The gentlewoman from missouri is recognized for five minutes. Thank you, madam chairwoman. I am concerned a 2020 launch date demonstrates deep insensitivity around how libra could impact u. S. National security, the Global Financial system, the privacy of people across the globe, criminal activity and International Human rights. I have a number of questions and i will try to move as expeditiously as possible. Are you taking steps to ensure that the dollar is not overtaken as the leading International Currency that undergirds Global Economic stability . Yes, congresswoman. The first of many steps is that the dollar is most likely going to be the predominant part of the reserve. 58 , generally speaking. I dont know what your numbers are. Be one of thewill predominant currencies backing libra. The other part is really the engagement we currently have with the g7 working group, with the fed and with the Financial Stability board. I serve also as the vice Ranking Member of the House Foreign Affairs committee. Im hoping to understand how the u. S. Government could sanctionsy implement if libra were to take off, north korea accuses cryptocurrencies to evade our sanctions all the time. If the Treasury Department demanded Libra Association addressescertain to comply with u. S. Sanctions, how would libra respond . I want to maken, a strong point here because its important. Whether libra launches or it doesnt launch, there will be other networks. There are other networks. There are other cryptocurrencies. Here e not coming ok if not suggesting its u. S. Evade u. S. Sanctions that libra can . Im saying we are here and we are engaging with the Libra Association. We will have strong programs as walletsfrom all of the operating here in the United States. Full enforcement of sanctions and then some. Libra could have significant. Eopolitical this product leaders could penalize users. How are you establishing appropriate human rights safeguards as you develop libra platform . One of the driving forces of the association, being Financial Inclusion, we will have the right representatives around the table. Which specific organization . Your folks cannot answer that to us yesterday when i asked. Which ones are you working with to address potential human rights impacts . We have mercy corps, womens world banking who are already founding members of the association. There will be more organizations that are dedicated their lives and energy in addressing the very problems you are raising. I am curious to understand how you think the libra will theract with section 230 of Communications Decency act that prevents state and local Law Enforcement from protecting citizens from illicit activities. If libra is explicitly being used to further a criminal act negotiated on Facebook Messenger. Congresswoman, section 230 as tonderstand it is related the Facebook Technology products. We have the protections of section 230. I dont believe this applies to payments. Criminals use facebook to fund raise, to recruit and connect with buyers. Facebooks moderation does not seem up to the task. Libra could make it easier for these nefarious actors to move money. Before launching libra and potentially compounding the situation, how would you be addressing the digital back markets that run rampant on the facebook platform . Congressman, the first way we will do that is ensuring on the calibra wallet everyone who opens the calibra account has to identify with the governmentissued id. We will have a full staff to address that. My time is expired. I have other questions to answer to the record. The gentlewoman from new york is recognized for five minutes. Thank you, madam chair. Mr. Marcus, we do not want to stifle innovation. Healthy dose of skepticism. Not silicon valley. You cannot work out problems as you go. Although those problems need to be resolved and worked out before you launch libra. For the third time on this side, i pose the question to you. Will you commit yourself to not launching libra before all the concerns from the Federal Reserve and other regulators are addressed . Yes or no . Absolutely, congresswoman. I went to reiterate this commitment that this was the spirit in which we announced early. Ok. I just want a yes or no answer. Thank you. Mr. Marcus, we gave the Federal Reserve increased oversight over known banks. We dont know yet what you are. If they designated you, please submit to enhanced oversight . Will you submit to enhanced oversight . I dont believe but you dont know what you are. Congresswoman, the lever association or calibra has no plans to engage in banking activities. As far as the calibra wallet is concerned, we are active in the payment space like many other nonbanks are active in payment space. We will comply with all regulations. We want to make sure that companies that do not fall into the normal market of Regulatory Authority could not threatened the u. S. Financial system. I would like to ask you, according to the Libra Associations white paper, members of the association will consist of geographically distributed and diverse businesses, notforprofit, nonmultilateral organizations and academic institutions. With theriteria initial members of the association chosen . Thank you for your question. The way that the initial members rided was as a result of a wide outreach. Is a combination of companies that can accelerate the utility of libra. Companies like uber and lyft and spotify that can accelerate the acceptance of libra within current Merchant Networks like that canmastercard, inform how to drive Financial Inclusion like mercy corps, kiva and women worlds banking. Starting the Libra Association is starting the phase of welcoming more members. I hear you. You want to get to 100, right . Yes. If a member for to determine they no longer wished to participate in the association, what is the process for withdrawal . At this stage we are in the process, all of us, the 28 organizations of ratifying the charter. As a result of this you dont know yet. As a result of this process if members dont wish to participate they can drop out. There is a process on an ongoing basis for members that do not wish to participate. Do you think a members withdrawal could threaten the value of the libra currency . I dont believe that is the case. According to the Libra Associations white papers, the association has a target launch of the first half of 2020. When you expect the associations charter to be finalized, will the charter be available for review by regulators, lawmakers and the public . Absolutely, congresswoman. To this question was asked before. I will yield back the balance of my time. Thank you. One clarification. Did you commit to the moratorium of ms. Velasquez . I committed to waiting i need a yes or no. I want to be precise. I committed to waiting for us to have all the appropriate Regulatory Approvals and have addressed all concerns. Thank you, very much. That is not a commitment. I want to clarify that. The gentleman from arkansas is recognized for five minutes. Mr. Marcus, thank you for being here. Whatted to talk about appears to be a core business element for calibra, the issue of remittances. The World Bank Says it is the single most important challenge and remittances around the world is lack of transparency and cost. The average global cost of remittances 7 . Tell me what fees you will be charging for moving money inside of the calibra system. Charge veryis to little or nothing for persontoperson transactions. We are hoping we can offer that part of the service for furry. B2c be charging and charging in fractional libra currency. There would be small emergencies that would be very competitive with the current fees paid by merchants. System youhe calibra will earn revenue from advertising . No advertising in calibra. Revenue streams when we start working on that, we have not and do not plan to for a number of years, will likely be by offering a range of inancial Services Partnership with existing Financial Institutions and banks. We knowose remittances what percentage of gdp remittance is represented, particularly in Central America and mexico. Sourcehe thirdlargest of hard currency in mexico and 20 in honduras. Both sides of that equation would be subject to kyc . Yes. On the calibra wallet you will not be able to open an account without having a proper kyc. B one issue in the third world not have a Stable Currency and are subject to terrible information, i read a note that 94 countries representing 48 of the worlds population, 16 of world gdp experience 10 or more inflation per year. Is it your view that the calibra wallet will have a more Stable Currency than the local currency . Or a more stable value i should say that local currency. The way w