As large tech and payments companies bail on Facebook’s Libra digital currency project, Federal Reserve Governor Lael Brainard Wednesday highlighted key risks that have yet to be mitigated, including the safety and security of consumer money flowing through Libra’s transaction rails.

Speaking in Frankfurt at a conference hosted by the European Central Bank, Brainard noted challenges associated with the implementation of Libra.

She explained that unlike social media and e-commerce platforms, payment systems cannot be “designed as they develop,” owing to the fact that they are connected to the protection of consumers’ financial accounts and are backed by regulatory frameworks.

“Statutory and regulatory protections on bank accounts in the United States mean that consumers can reasonably expect their deposits to be insured up to a limit,” said Brainard. “Not only is it not clear whether comparable protections will be in place with Libra, or what recourse consumers will have, but it is not even clear how much price risk consumers will face since they do not appear to have rights to the stablecoin’s underlying assets.”

She cited questions over anti-money laundering, counterterrorist financing, know-your-customer, as well as monetary policy implications. In support of these concerns, Brainard cited an industry report which found that roughly two-thirds of the 120 most popular cryptocurrency exchanges had weak frameworks to deal with these challenges.

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For now, the Fed is throwing its weight behind the traditional banking system while it assesses the benefits and risks associated with central bank-backed digital currencies.

“We have a robust and diverse banking system that provides important services along with a widely available and expanding variety of digital payment options that build on the existing institutional framework with its important safeguards,” she explained. “We look forward to collaborating with other jurisdictions as we continue to analyze the potential benefits and costs of central bank digital currencies.”

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