From the g7d review working group and others, is to have a very stable value retentive Digital Currency. It will be a very high quality Digital Currency in a number of countries that are currently receiving a lot of their income from abroad. They will now receive a lot of their income from abroad in a Stable Currency that will retain its value. Obviously many of those same third world countries and some than third world have very strict controls on foreign currency. They have currency controls and currency boards and do not allow their consumers to take action outside of their home currency and they do not allow their home currency to be taken out of the country. How does liu brooklyn on dealing with that . Libra plan on dealing with that . There are lots of countries that have the problems you highlighted and do not have currency controls that we can address right away. For other countries it will be on a country by country approach. Any wallet on top of the Libra Network will be interactive with one another. To provide the value we intend we do not need to be the only wallet and in certain regions it will be other wallets but we would still benefit. I thought that was an interesting conversation with my friend from new york about the exclusivity of the wallet, calibra wallet in whatsapp. Would100 members debit and Credit System available as a wallet . We will have a number of other Payment Methods for facebookon the platform or instagram as well including debit, credit cards and other wallets. As far as p2p payments there will be more. There will be competition on p2p payments even on facebook applications . There will be on traditional currencies in the same way that within messenger you can currently use debit cards. Also the chair for the subcommittee on Consumer Protections and Financial Institutions is recognized for five minutes. Mr. Marcus, thank you for your testimony. Say with confidence that niemann brothers, bear stearns and the entire subprime mortgage ecosystem did not set out to bring the Global Financial system to its knees. I can say with confidence that a legitimately Brilliant Minds and ltcm Prize Winners behind did not set out to trigger the Asian Financial crisis but it almost broke global markets. I can say that the deregulation of the early 1980s did not set out to trigger the banking saving and loans crisis. But it did. They all typically founded their logic in innovation, expanding access to Financial Services and arguments of inclusion. Yet they all broke the system. The people at the bottom of the social economic ladder systemically pay the heaviest price. You may be speaking earnestly when you tell us the lofty goals but i was hearing congress when secretary paulson came to us and told us we were within days of a complete shutdown of the Global Financial system. I dont expect you to understand what that was like but i assure it was absolutely terrifying and one of my worst moments in congress. I want america to remain a Global Leader in Financial Services innovation and i believe we have regulators that are the best in the world. Lets assume that facebook even 10 of its current user base to use the libra wallet. Understand that would make you a systemically risky Financial Institution and that we would expect you to be designated as such . And the fed to create a special Regulatory Oversight program for facebook accordingly. Would you agree to this . Congressman, first of all i want to recommit. Yes or no would you agree to this . I want to share that i only have a small amount of time. I want to answer the question to the best of my ability. Of our user base which is 200 Million People using the calibra wallet we would be the same size as many other nonbank payments or wallets around the world including here in the u. S. And another one. You are not answering my question anyone that is Holding Money can be considered a bank. You agree that defined simply an organization that holds deposits and makes loans is a bank . Didlarly, banks in the past issue their own currency or ious and clear payments. Some banks are run as nonprofit organizations or cooperatives are facebook or Libra Organizations planning on establishing Bank Holding Companies with full organization and capital structure required to protect the Global Financial system from Systemic Risk and systemic collapse . We will not engage in Banking Services, will focus on payments. You are taking peoples money right . And you are holding their money, correct . The same way that you have been mowed and paypal and square cash. You arere telling me not going to organize as a bank, you did not answer my first question which will put you under the regulation of others so we can make sure there is no Systemic Risk here because of what you are doing that could bring down the entire federal government the in tire financial the entire Financial Services industry. Let me ask you one more. In doddfrank we established the cfpb to serve as a financial regulator focused specifically on the best interest of consumers. Do you believe that the cfpb currently has authority over the Libra Organization and the Facebook Libra wallet . Dod you not conclude you think cfpb has jurisdiction . Engaged in conversation with all agencies including cfpb. Why did you not include compliance with cfpb in your prepared testimony . Because we are currently engaged with all of these agencies and i wanted to share where we were right now at this point in time with the knowledge we have at this time. We will have a more complete outreach by the time we are ready for launch. Clarification. I understand that you are absolutely opposed to the oversight and that you dont nk they should be allowed i am not opposed to any regulation and we have had conversations with their sock we will move on to the next version. The gentleman from missouri. Thank you. You made a statement a while ago that the Current System is not working. Because i think the Current System is working, it is not working as efficiently as you would like to see it work but i think the system right now works because it is kind of like traffic controls. If you are on a country road and you have cars getting through the intersection you do not need traffic control. If you have an intersection that has 30,000 cars a day going through it you need traffic to protect people for safety purposes and to be able to transact the ability to go through that thing in an efficient way. Talking about the size and scope of money transactions and it costs a little bit of money to be able to transfer money around the world but that is because of safety and security concerns as well as the mechanisms in place to do that. What you are trying to do is take away some of those costs. We are concerned about the safety and a transactional transparency here. The system is working but you would like to improve it as i think what human to say. Is i think what you meant to say. Systemally believe the is not working for way too many people right now. The reason the people who earn less and have the pay more is because of andlation and having kyc aml. I believe we can do that as a lower cost. You said you agree the system is working just not as efficiently as you would like to see it. Something else you said a minute ago. You said you will offer more Financial Services as you go down the road. Just a minute ago you said you want to offer no Banking Services. Which one is it . Are you going to have deposits down the road that you pay interest on . Lendinggoing to have that youre going to be doing to customers . What kind of Financial Services or Banking Services are you intending to go into . It is too early but if we are to engage in the services we will partner with existing banks and Financial Institutions the same way that other Payment Companies have done it. Im talking exclusively about the calibra wallet to be precise. The specificds to ask that you will hold in reserve, who puts the money who puts the assets in to begin with, who owns the assets, what do you do with any dividends or interest or any returns on those investments you make . Who shares in those profits . The way the reserve is built libraconsumers buy into the money they used to buy libra ends up in the reserve and is custody with large banks or potentially a better form of custody depending on the outcome of conversations we are having with the g7 working group and the recommendations that they will come with. The reserve is always proportional to the number of libra coins in circulation. If the reserve generates a return it will be used for keeping two things. Number one to pay for the association and operation of the whole Libra Network. Number two, to return some of to originalnt back investors and backers of a system that will put a lot of resources to get it off the ground. One of the things as we look have a business and i am trying to sell 1000 units to somewhere in france and i want to use the libra system to facilitate this, when i get done with this transaction i have an income and i have to report that to the irs. Is there a cost to change back from the libra to the dollar . So that i can explain to the irs the kind of transaction and money i have earned off this transaction, is there a fee to doing that when you transfer libra to dollars . Congressman, there will be a small fee because there will be agents and exchanges that will be involved in the process of converting fiat into libra and back to fiat. From an irs and tax standpoint as far as the calibra wallet is concerned we will have the proper tools built into the product. The gentleman from georgia is. Ecognized i have listened to your testimony and to the response of several of my colleagues questions here. You keep mentioning your white paper as a defense to an answer to the questions. I want to call your attention to the fact that neither your white paper nor your subsequent Facebook Post offered any concrete details as to how you plan to implement or enforce strong antimoney laundering, knowou plan to enforce your customer protections and most importantly to ensure that is what all of us are concerned about, the safety of our financial citizens. Right now, tell us, what specifically, dont say the white paper, what are you going to do, what do you see as the responsibilities of libra to combat antimoney laundering . To protect our financial systems. Could you tell us right now . Yes. Two parts to that answer. The Libra Association itself, Libra Association will be based in switzerland but will still register and we will have program and guidelines for all the members to enforce k y c standards. Calibra wallet is concerned for every account opened we will ensure that withone kycs appropriately government ids. What about this currently . Fileull responsibility to suspicious activity reports are on our banks or other money which lawusinesses enforcement uses to investigate and prosecute criminal terrorist. Onlyur july post you spoke of the ability for Law Enforcement and regulators to conduct their own analysis of off the chain activities. Do you feel that this represents a shift away from libras own responsibility to monitor and enforce antimoney laundering or customs protections . Know, congressman. No, congressman. The approach libra is taking is using a blockchain and blockchain gives additional visibility too long for smit and regulators compared to the Current System. Of solely depending on banks or regulated entities self reporting. That does not mean that we on the calibra wallet side and all operatorser will not have a strong programs and not file suspicious activity reports. You are marketing this currency as a new entity to Financial Services. New that will surely come and innovative methods of committing financial crimes. These newng criminals are going to find out ways to deal with it. What are you anticipating as some of the new ways that exportls may attempt to and exploit libra for illicit use . And how are you combating to do this . You are planning something new but you also have to have the look down the road but the able to look around corners to see what the criminal has in store for us. What say you . I could not agree more with you. I agree that we could improve on the Current System because we have a chance this time around to think through the way the network is designed and the way the on and off france are properly regulated with proper kyc controls. The proper way to monitor activity and reported with new technology. This new system might be potentially better on these fronts. Thank you, mr. Marcus. The gentleman from michigan is recognized for five minutes. There is so much and so little time. I will try to go through and get to some new territory. I was not planning on doing this but you used the term fiat currency a couple of times. I find it with that meant and it seemed on that you are using that in the way that you were. I went to wikipedia. Withoutrency is a money Intrinsic Value that has been established as money. Have used value and is valued only because the government maintains its value or parties maintain an exchange to agree on its value. We see that people are using cryptocurrencies with no backing. I am curious, why do you feel the need to have a reserve . It strikes me as you are using a fiat currency to create a fiat currency and to have a reserve of that. Reserveeason we have a is that we believe that to create a high quality payment tool we need Digital Currency to and as we have seen with a number of other currencies, Digital Currencies are very volatile and are not a very good medium of exchange for payments. It is a trust issue. It is an inherent quality that money has. If it is stable it is good money but if it is not is not. Becouldnt stability influenced by Peoples Trust levels of currency . Yes and no. You would fit cryptically into washington with the yes and no. It does getting them involved in the financial space. Often times they are not in that space because they have a distrust of Financial Institutions. Timeesnt take anyone much to find issues of trust with a number of companies that are involved in calibra. Im not sure exactly how you are going to address this. To theget back regulatory implications. I have the pleasure of being the chair of the Monetary Policy and trade committee at one point and i am the Ranking Member on a different financial committee. Looking at these Crypto Assets, cryptocurrencies, as the Ranking Member asked, as an Exchange Rated product what is this . It seems it is more of a platypus to me, that it involves in different parts. Are you able to actually the core and essence of a cryptocurrency and asset if you are really under all this regulation . Because weve we can believe that in order for any form of Digital Currency and Payment System to reach allould you like to see other Crypto Assets and cryptocurrencies under the same regulation you are or are you trying to carve out this new product . I cannot speak for other Crypto Assets. If youre looking at it going that is not working for them otherwise why would you come and ask for this regulatory burden. We believe that this is a currency of the comparative other cryptocurrencies it serves a different purpose. This one is to serve as a payment tool. When it reaches so many people we believe that appropriate regulation and oversight is required. You might be a public of American Express travelers checks. Of days of old. Things they were actually paper and you carried them with you. You bought them at a bank and you put in a fiat currency towards it. My time has dwindled. And i have one last quick thing. The chairman had asserted you had not been in contact with the swiss, is that true or not true . Because you and said earlier you have. We have been in touch with them and the other agency was a private agency we have not reach out to. I will follow up with some written questions. The gentleman from colorado is recognized. I will take off where he left off. To help me understand the deal. Have five dollars. I go and buy one token of libra for five dollars. You take that five dollars and what do you do with it . The five dollars you would use to buy libra would end up being in the reserve and so in the current contemplative basket it would mean that 2. 5 would be in the reserve and another 2. 5 would be in a basket of euro, pound, yen. Because the reserve is one for your libra unit of value will be act up by the same value in the reserve at all times, guaranteeing resilience. That reserve is in the cloud, the bank, where . It is custody with very large global banks that provide custodial services to a number of companies. This is something we are in discussion with in the g7 working group. To make sure there is proper Regulatory Oversight in how this is managed. We have this medium, this currency called libra. Now it is half year and half there. I want to buy something in paraguay. If i was using dollars that would cost me four dollars. Calibra and it is like my credit card and it wires forfeits of a token to paraguay it wires 4 5 of a token to paraguay . You would use any wallet, calibra being one of them, to transfer the money to another country. Theway it would work is same way you would use any payment act in the u. S. Like event mode or paypal. It is a wiring system more or less except im using libra. Co. Libra is a wiring system. Ive been mode my daughter venmo my daughter 20. I couldve gone to the bank and they could have wired it to her but i used venmo. It is similar to your experience on venmo. What we are struggling with is what are you . You are an intermediary, you are facilitating financial is not as ifand it we have not had problems with that in the history of the world. You have a Money Changer in the process turning my dollar into a libra into a euro. The transaction is something we have had from the beginning of time but it is a faster kind of wiring and more immediate transaction. That . Istaken and it is also a much lower cost for people who end up needing at the most. I appreciate that. For us we have seen banks fail. We had the old saying what is good for gm is good for america. They have to go through a chapter 11 back in the recession. Recession. I do not think that will happen to facebook or whoever is backing this process, but it is possible. Our responsibility is to your depositors or the people who buy these tokens or that use your credit card system. We are trying to figure out what kinds of regulations. I think youre getting good questions from both sides of the aisle because we all have the same question. That is the resistance you are feeling because we think you are a bank. Youre not quite like a bank. You are watching the house Financial Services committee hearing. David markets in the hot seat. David marcus in the hot seat. You can keep watching using the bloomberg function alive go and follow around for analysis on our live blog. We will return to the hearing shortly. First we want to check in on how europe is faring. A couple of seconds left in the days trading. It is red across the board. Indices and all of the European Countries are lower. 3 , the cac 40 down. 8 and the ftse 100 down. 6 as well. Plenty of reasons for this drop. We are seeing yields drop as well. Lets get the some of the individual stocks moving markets. The maker of dialysis machines is one of the biggest drivers on the dax. Trying out one of its new dialysis machines. Dialysis is a massive industry in the United States. If cvs were able to provide these machines, that would adversely affect the other companies. One of the luxury stocks higher after burberry reported most analysts, the luxury stocks are doing well. 100,ial brands in the ftse even though the index at large is lower. Capitalallocating some toward the blue smokeless tobacco device. Lets get into those yields. Down six basis points on the u. K. 10year. The german tenyear as well and bleeding into the u. S. We have a few basis points lopped off. I wanted to point out sterling versus the u. S. Dollar is just slightly stronger. Yesterday it was below 1. 24. Today a bald call. They go to parity if a no deal brexit scenario rings out. Lets have a quick look at what is going on in the u. S. The s p 500 down about. 25 . The nasdaq down. 1 and the tenure down below three basis point the 10 year down below three basis points. Transport dragging on indices. Fears for the other rails and some of the other transports. , but the stock down. 5 . Bank of america earnings today, margin pressures, but most of the news was wellreceived by analysts and up 1. 3 . Caterpillar one of the other major stocks lower. That is look at global markets. Markets,with global lets check in with Allianz Global Investors global strategist. What you make of the days trading . What is driving markets now that trade seems to have taken a step backwards . Where we are now in the markets as we are right in the middle of result season. In the u. S. We are getting average banking results and in the europe, where expectations are lower, i do not think you are seeing anything to get investors excited. We are staying with the macro theme. Trump is more pressing trade on europe we are seeing Oil Prices Take the shine off some of the markets in europe like the u. K. And france. Vonnie rather than just wait for something to happen on trade , are you doing anything proactively with your portfolio to prepare for various scenarios . We are still in the camp that a trade deal between china and the u. S. Is a 5050. I think on the basis that i think the markets are fully priced in a trade deal, i would be looking to think about where there could be hits to the market if there was a trade war. I think that focuses on the technology sector. When one of when one looks at the relative performance between the u. S. Outperforming asia, i would be taking profits in the bounce in a few of the big u. S. Trade sectors. I think in europe, the fear is now growing that President Trump is moving through airbus, he is moving through italian ges and toward potential german autos. ,here is a fear building although it may be in the price. We will see. The terror issue will come to europe in the coming months the tariff issue will come to europe in the coming months. Vonnie marcus markets focused on earnings. The expectations were about 11 . Does that look likely . If itf it is like is likely, it is coming in the second half. As we get to the end of this result season in the u. S. Will be lucky to be flat. Some of the headlines youve been writing it has been called an early recession because we will have q1 earnings down in qqq earnings down. I cannot see where the earnings improve in the second half of the year when one thinks about the risks around trade. I think when one looks at europe, expectations have been lower. I have to be honest. Many of the european corporate have not surprised to the upside. The only good news we are seeing in europe is the profit warnings in the last week from daimler have been met with unchanged share prices. Maybe in europe a lot of the bad news is already in the price. Vonnie what do we do with currencies given that we might be looking at a scenario where the british pound tumbles. Stanleyctor of morgan saying we could be looking at parity if there is no deal brexit scenario. Neil i think we have been living with this brexit uncertainty inside sterling for some time. We have been saying to clients that sterling is the that will , depending one good news or bad news. Both of the conservative Party Candidates for leadership have been sounding quite constructive on a no deal type of outcome, if that is where the negotiations with the European Union work ahead. Head. E to i would argue that many clients have already taken a view, they have hedged sterling or sold sterling. Im not sure how much and there is to a weaker sterling. Economic numbers, sterling is 30 undervalued. As i travel around the world in asia for the last two weeks, im finding a lot of clients looking at the u. K. Because sterling is so attractive to them when they think of their own domestic currencies. Vonnie speaking of outside of europe, what emerging markets look attractive to allianz right now given that we have a lot going on, particularly in the u. S. 99 cuttingreserve at the end up this month. Neil i think many of us have been forced to move out into emerging markets because of the dovishness from the Federal Reserve and the need for our clients to hunt or income. To hunt for income. Many of our clients are navigating idiosyncratic political risks, whether it is the new president in mexico, whether it is the new president in brazil or pension reforms, i think where we find the highest confidence is to look toward india and indonesia where we see the existing administration has been reelected. There is confidence there will be structural reform and a further boost to growth. We are still constructive on russia, where the oil price around 60 or 65 is giving president clinton plenty of fire president Clinton Vladimir Putin present of power to keep the russian consumer happy. In certain areas of emerging markets, there are areas where you are being paid to take risks. Guy vonnie that is neil duane, Allianz Global Investors global strategist. We have the dax in germany down. 7 . It is just being outperformed to the downside by the cac 40, which is down more than. 75 . The same for the ftse mib in germany. In italy. Dialysis machine maker today we learned cvs is getting into that business. It is trying out different options. If it were to get into that otherss, it could dent business. One of the other stocks not in these indices, ericsson, it had a run of earnings beats but today ended the run. It had a warning saying the first big deployments in asia will cool down margins and that is not pleasing ericsson investors. That stock down double digits. This is how markets settle the day. Now lets get back to washington, where members of the house Financial Services committee are questioning facebooks david marcus on the plan for the Digital Currency libra. You are certainly backed by other securities. Is that not correct . Believe no one will buy libra as an investment because it is designed for stability. That is number one. Number two, when you look at the definition of securities that sec, it used by the uses the idea that you invest for a profit that will result in the management of the product and this product is not a product, it is a payment tool. It is not going to be actively managed. You cannot use an etf for payments. This is designed as a payment tool to enable people to retain value. Lets go back to my original question. How will you make transparent what you are knowledge as foreigncurrency risk that consumers will face . How do you envision doing that . Mr. Marcus as far as the libre wallet is concerned, you will have transparency and education eldin to the product. My times expired. Thank you. The gentleman from ohio is recognized for five minutes. Chair andou madam welcome mr. Marcus. We all say we want to encourage innovation and i do want to encourage innovation. I would like to walk through a timeline so we know where we are the innovation process. , i willme if i am wrong just ask a couple yes or no questions. It was 60 days ago you announced the idea, correct . Mr. Marcus it was on june 18. I thought it may there was nothing in may . Mr. Marcus we are 30 days from the white we are 30 days from the white paper. This is an early congressional hearing. With that i will understand you will not have the answer to every question. I do appreciate your commitment you meetling to ensure all of the regulatory hurdles and comply with the law. The value i see in this innovation is for crossborder payments. That is so expensive today. A second for the on bank. For the unbanked. Can you tell us what is in it for somebody domestically that already has a bank account and is not looking for crossborder payments. I do not see a big application for those folks. Mr. Marcus im glad you asked. I doubt people will pay their soon. Ith libra anytime the general usage we believe will happen in the u. S. When you have a bank account and you are wantrly banked is if you to send money abroad, you will connect your debit card to one of the wallets and by the right amount of libra you need to make that crossborder transaction. Youll say a lot in the process but it money comes back, you will redeposit it to your bank account. You do not expect people to because theibra point is to have a Stable Currency, not a volatile currency. That is where the value comes in. 60 of the worlds population lives in a country that does not have a Stable Currency. I appreciate that and there is value in that. I do have concerns about the potential of money laundering. Cryptocurrency and the silk road started as a way to anonymously finance illicit , or is one of the early things it was used for. Im concerned about crossborder payments that are going to people that have bad intent. Im curious, will you put a limit on the amount of any individual transaction. I know it is early. I recognize the timeline of where we are. Do you expect to put a limit on how much somebody can transfer to someone else . Mr. Marcus we are going to continue our engagement with treasury on this topic. My expectation is there will be limits, depending on where the money is spent or where it is coming from. Betweenis that consumers of american regulated wallets like libra and others, we can avoid having artificial limits. We will probably need limits across the network to ensure those activities im not asking you to put artificial limits. I was just curious. I want to make sure you comply with your customer and antimoney laundering. That is complying with the law, which you said you would do. Expect to have the Libra Association vote to exclude Companies Like chickfila or anybody else that might have social views you disagree with . Mr. Marcus this is actually not going to be my decision or facebooks decision. It is going to have to be a decision that is going to be taken by the council of members of the Libra Association and the Libra Association itself. I understand and i would urge you not use this for social engineering but to meet the intent we talked about the about helping the unbanked and people with crossborder payments. I hope that is the purpose and not social engineering. I appreciate your time. There are unanswered questions. I appreciate the innovation and your time. I look forward to working with you as you work to make sure you follow every law and regulation. I know it will be a challenge because you will be dealing with 200 countries regulations. Thank you so much. The gentleman from california, mr. Sherman, is recognized for five minutes. We need to get Mark Zuckerberg here. Thing, or itiggest tries to be the biggest thing this committee will deal with this decade. While we have one of his employees here, this is zuckerbergs program. We are told by some that innovation is always good. The most innovative thing this century is when Osama Bin Laden came up with the innovative idea of flying airplanes into towers. That is the most consequential innovation, although this may do more to endanger america then even that. Libra. Call this the it is not the libra. If it happens, they will call it a zuck buck. This is zuckerbergs baby. Esther marcus gave me promises in our conversation yesterday, both of with both of which he knows they will not comply with. First he promises all of the antilaundering all of the antimoney laundering will be here to. That is only to the libra wallets. He has to to have hundreds of other wallets created by others. In bitcoin, transactions are for drug deals and various other operations. Hamas advertises they want bitcoin contributions. Bitcoin has a problem. There is no offramp. There is no way to buy something with the bitcoin. You can with a zuck buck. The white paper put out by Facebook Says the libra protocol does not link accounts to realworld identity. A user is free to create multiple accounts by generating multiple pairs. This is a godsend to drug dealers and sanctions evaders and tax evaders. Zuckerberg has billions but he does not have the authority to print more until he gets this. Wewent from the u. S. Dollar, went from the u. S. Dollar being linked to gold and we only printed dollars equal to the gold we had to the dollar becoming valuable in and of itself and now we can print as many dollars with nothing to do with how much gold we have. Mr. Marcus promised me they would never do that, but then he testified the Libra Association will make all decisions and facebook will not be in control. Americas power comes from the power of the dollar, more than the power of our military. It lowers the Interest Rates in the United States by at least 1000 a family. The super rich has allowed the fed to transfer 100 billion to the treasury. Our sanctions in iran are effective only because of the power of the dollar. We are able to go after whom you and just go after human traffickers because of the power of the dollar and go after human traffickers because of the power of the dollar. They say they will solve the problems. Crossborder transmissions lets do that in dollars. Lets in a whistle to guatemala. You have a trillion dollar company. Help people make transmissions at low fees with dollars or local currency. We are told they will deal with the unbanked. If they wanted to help the unbanked, they would not use a cryptocurrency because they are illegal in india, the place with thananked with anywhere else. They are solving two problems. One, zuckerberg cannot print money. Two, zuckerberg is under attack because he invades the privacy of ordinary americans. He needs to be an advocate for privacy, so he is creating a device that will provide privacy to drug dealers, human traffickers, and tax evaders. We need zuckerberg here. We need to tell him that he probably has the power to push this through. He will throw around millions of dollars in washington and his supporters will get huge zuck bucks in u. S. Dollars. 100 lawyers will tell him that what he is doing is legal. Someone with an understanding of the politics of this country needs to explain to mr. Zuckerberg that of cryptocurrency is used to finance the next attack against americans, 100 lawyers standing in a row charging 2000 an hour are not going to protect his rear end from the wrath of the American People. This is an attempt to transfer enormous power from america to facebook and a number of its allies. We need zuckerberg here. Kentuckyntleman from is recognized for five minutes. Thank you, madam chairman madam chairwoman. Given the commentary we have heard in this committee and some of the very pointed questions directed your way, i think we decisionvering why a has been made to locate in switzerland as opposed the United States. Having said that, i want to address some of the concerns that have been raised today and ask you about them. There are legitimate questions we can ask. It does seem like, in washington, whenever the private sector produces some kind of innovation or new advancement, politicians and bureaucrats rush to criticize and regulate. There is always a presumption that the private sector innovating is a bad thing. I think the presumption should be reversed. We should presume that innovation is good. It presents enormous opportunity for Financial Inclusion, reducing friction in transactions, the opportunities created by this innovation is laudable. That is not to say we should not ask questions. The presumption in this hearing room today seems to be in the wrong place. You about the possibilities, the opportunities this presents, particularly with respect to Financial Inclusion. What percentage of users on or ubook are underbanked work nbanked . Mr. Marcus i do not have the answer for facebook, but i know over 8 million households in the u. S. Why dont you know how many facebook . Facebook is often criticized for invading the privacy of americans are why doesnt facebook know how many of its 2. 6 billion users are on banked or underbanked. Mr. Marcus there is no way for us to know that information. Usershave any idea how my of Facebook Live in Rural America or bank deserts . Mr. Marcus i do not have the exact number but i can find out and follow up with your office. If you know or do not know, we would like to know that. How will libra and project libra promote greater Financial Inclusion in the United States . Mr. Marcus we believe that having the ability to access digital money, where you can safeguard the value you want to safeguard but more importantly transact with the people you want to transact for free, simply with a 40 smartphone and a basic data plan, is something that would advance the ability for people, even here in the u. S. , despite the fact we believe this is not going to be the main market for libra, it will solve problems for lots of people in the u. S. , notably the people who are unbanked today , whichd money abroad makes for the bulk of the income of their families at home. I will not ask a question but i will jump on to appoint mr. Duffy was making earlier. I think the opportunity for Financial Inclusion with project libre is enormous. I share mr. Duffys concern about what the inclusion actually means and to the extent facebook and other social Media Enterprises have been criticized think thatal bias, i is important to earn the credibility of the American People that this platform, this financial platform be viewed and earn the confidence as a neutral player so that the adoption can serve all and serve the ultimate purpose of Financial Inclusion. The final question relates to the testimony you have delivered that this project will not compete with Central Banks or interfere with Monetary Policy. We have heard from the chairman of the fed recently that whereas bitcoin or other Digital Currency endeavors do not present a challenge for Central Banks, that this could, because usersebooks 2. 8 billion and 1. 6 billion daily users, it does have the potential for Widespread Adoption big enough to potentially displace the u. S. Dollar as the worlds reserve currency, and therefore interfere with central banking tools, interfere with a Monetary Policy. Will notow libra undermine sovereign currencies and the power of Central Banks, or is the point to undermine central bankers and to provide a greater freedom away from central banking . Mr. Marcus i want to be very clear. We do not want to compete with the dollar or with sovereign currencies. This is why they make the reserve. Even our now are even in our wildest greens will we come anywhere our wildest dreams will become close to the type of currencies you mention. We will make sure to work with the fed and with the g7 working group to ensure the proper controls the gentlemans time has expired. The gentleman from illinois is recognized for five minutes. Thank you madam chairwoman. As the cochair of the Blockchain Caucus and the only blockchain programmer and ai programmer in the u. S. Congress i want to thank you for having a detailed individual briefing with me on this. There are a couple of things i was promised during those briefings that my staff tells me have not yet been delivered. One of them is when we got into a detailed discussion of how you would prevent us from being used for ransomware. I was promised there would be an answer. Are you prepared to give that answer . If not i would like to drill down into how anonymous these transactions in libra would be. Mr. Marcus ransomware is an important issue and the way we are thinking about it as far as the wallet is concerned im interested in libra. Libra, which im understanding is an anonymous instrument. Is that correct . Mr. Marcus it is not anonymous. We believe that especially in countries like the u. S. And others, you will have all of the wallets im not worried about wallets, im worried about abuse of self custody. If i own the code for a piece of libra, do i own that libra . Mr. Marcus yes. If i dont the dark web and start offering to trade that, to have any technical way of stopping me from doing that anonymously . Mr. Marcus yes. There are on and off ramps and all of the on and off ramps are properly kyced. All of them. So once a large fraction of libra would be transferred into self custody and there starts to be significant flow among the self custody entities on the dark web or other places, how do you prevent that from actually allowing things like ransomware . Mr. Marcus a very important problem and the way we are tracking and the way the soociation will enable tools that Law Enforcement and the different wallets can understand where the movements are happening to prevent those issues is going to be one of the ways well will address this. Going to have to be absolutely dependent on the fact that every single wallet is in a Regulatory Regime that we trust. Is that right . If there is some wallet that does not follow the u. S. , are we just out of luck, and that all of the illicit transactions are pulled through their . Mr. Marcus if you are a u. S. Resident and want to use a wallet, the wallet operating services in the u. S. Will have to be properly regulated in the u. S. We will have to have an ongoing discussion. I would like to mention cybersecurity. One of the main jobs of have stock is to oversee cybersecurity. You have seen fit to make a new programming language and i spent a little while looking over that. There is some creative stuff in it. Some of it is copying things that have been done before, some of it is brandnew. Even if it had zero creativity, there would still be a problem that one wrong line of code could generate a whole that would crash the entire libre system. A