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WASHINGTON, D.C. — Today, Congressman French Hill (AR-02), Ranking Member of the House Financial Services Financial Technology (FinTech) Task Force and House Financial Services Artificial Intelligence (AI) Task Force, participated in a House Financial Services Committee hearing titled “Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System.”

Congressman Hill questioned Calibra Chief Executive Officer, David Marcus, about the cross-border impact of Facebook's proposed cryptocurrency "Libra," including the effect on international remittances, inflation, and currency regulation. 


The transcript of Congressman Hill's questions is copied below:

Congressman Hill: I wanted to talk a little bit about what appears to be a core business element for Calibra, the issue of remittances. The World Bank says the single most important challenge in remittances around the world is lack of transparency and cost. The average global cost of remittances is 7%. Tell me what fees you will be charging for moving money inside of the Calibra system.

Mr. Marcus: The goal for Calibra is to charge very little or nothing at all for person-to-person transactions. We are hoping we can offer that part of the service for free.

Congressman Hill: Then therefore on [business-to-business] or [business-to-consumer] you’d be charging--fractional Libra currency.

Mr. Marcus: There will likely be small merchants’ fees that would be very competitive with the current fees paid by merchants.

Congressman Hill: Inside the Calibra system you will earn revenue from advertising as well?

Mr. Marcus: No Congressman. No advertising in Calibra. The Calibra revenue streams, when we start working on that, which we have not at all and do not plan to for a number of years, will likely be by offering a range of financial services in partnerships with existing financial institutions and banks.

Congressman Hill: In those remittances, which are so important to countries all over the world, what percentage of GDP remittances [are] represented, particularly in Central America and Mexico? It is the third-largest source of hard currency in Mexico, and 20% in Honduras. [would] both sides of that equation be subject to [Know Your Customer Guidelines]?

Mr. Marcus: Yes Congressman. On the Calibra wallet you will not be able to open an account without having proper [Know Your Customer Guidelines].

Congressman Hill: One issue in the third world is they do not have a stable currency and are subject to terrible inflation. I think I read a note that 94 countries, representing 48% of the world’s population and 16% of world GDP, experience on a regular basis 10% or more inflation per year. Is it your view that the Calibra wallet will have a more stable currency than their local currency? Or a more stable value I should say than local currency?

Mr. Marcus: The way we have designed the reserve, subject to proper oversight and review from the G7 Working Group and others, is to have a very stable value retentive digital currency. Yes, 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.

Congressman Hill: What do you think about many of those same third world countries, and some larger than third world, have very strict controls on foreign currency? They have currency controls, they have currency boards, they don’t 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 Libra plan on dealing with that?

Mr. Marcus: Congressman, this is going to be a country-by-country answer. There are lots of countries that have the problems you highlighted and do not have currency controls that we think we can address right away. For other countries, it will definitely be on a country-by-country approach. The one thing I want to highlight though is the fact that any wallet, not only Calibra, any wallet that is actually built on top of the Libra network will be interoperable with one another. Meaning that to provide the value that we intend to provide for so many people, we do not need to be the only wallet. In certain regions, it will be other wallets, but they would still benefit from interoperability.

Congressman Hill: I thought that was an interesting conversation with my friend from New York about the exclusivity of the wallet, Calibra wallet, in WhatsApp for example. You have 100 members that are not interested in Facebook having any more of a monopoly than they do now. Would you have Visa's debit and credit system available as a wallet?

Mr. Marcus: Congressman we will have a number of other payment methods for commerce on the Facebook platform and Instagram, as well including debit, credit cards, and other wallets. As far as [Peer to Peer Payments] there will be more…

Congressman Hill: There will be competition on [Peer to Peer Payments] even on Facebook’s applications?

Mr. Marcus: There will be on traditional currencies in the same way that within messenger you can currently use debit cards for [Peer to Peer Payments].