Facebook’s plans to launch a digital currency have come under pressure from the US federal reserve chairman, who warned that the plan “cannot go forward” unless regulatory concerns over data privacy and financial stability have been dealt with.

Speaking to the US House of Representatives Financial Services Committee Jerome Powell echoed concerns raised by lawmakers from the US and around the world over the potential for Facebook’s Libra currency to disrupt the global financial system if not properly regulated.

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” said Powell in comments made to the House of Representatives Financial Services Committee and reported by Reuters news.

Without a “patient and careful” review of the project, Powell stated, “I don’t think the project can go forward.”

Facebook is understood to be "aligned" with Powell's calls for a public conversation over the potential impact of Libra including warnings over the need to ensure open collaboration instead of "sprinting to implementation."

It is unclear what regulatory action the US Federal Reserve could take to halt the roll out of Libra, which Facebook has said will go live in 2020.

However, US lawmakers have called for the project -which is being overseen by the Libra Association, a consortium of 28 tech and financial firms- to be put on hold until policy makers can fully review its potential impact on consumers and the global financial system.

Facebook has said that the goal of the Geneva-based Libra Association is to gather feedback from regulators and governments in advance of its roll out as a global, reserve-backed digital currency.

This is why we along with the 27 other Founding Members of the Libra Association made this announcement so far in advance, so that we could engage in constructive discourse and get feedback.

Officials from Facebook are due to appear in Congress to discuss the project later this month.

Amongst the reservations financial regulators have expressed are the existing scale of Facebook’s social networks, which counts more than two billion global users across the Instagram, WhatsApp and Facebook platforms, meaning adoption could have a rapid and potentially disruptive effect on the banking system.

Powell explained that the reach of the digital currency, which will enable payments and online transactions via a digital wallet, could also be one of the major challenges for global regulators which as yet have limited frameworks to deal with digital currency.

“It’s something that doesn’t fit neatly or easily within our regulatory scheme but it does have potentially systemic scale,” he explained.

Facebook’s announcement in June that it was developing a digital currency has sparked backlash from policymakers and regulators around the world.

The Bank for International Settlements, which represents the world’s central banks, has warned of risks to financial stability, competition and data protection from digital currencies and called for governments to ensure a “level playing field between BigTechs and banks.”

In his Mansion House speech last month, Bank of England governor Mark Carney expressed cautious optimism over the potential of properly regulated digital currencies, suggesting that the central bank could open its balance sheet to new payment providers such as Facebook.

However, he also called for a swift regulatory response to Libra, saying:“Unlike social media for which standards and regulations are being debated well after it has been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”

An explanatory note from David Marcus, a former president of PayPal who now oversees the development of Facebook's Libra project states: "We’re talking about something new, at scale in a very regulated industry, and if this is not done right, it could definitely present systemic risks no one wants."

It adds: "This is why we believe in and are committed to a collaborative process with regulators, central banks, and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting, notably around money laundering, terrorism financing, and more."

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