Last week, in the face of fierce pushback from politicians and regulators, PayPal, eBay, Stripe, Visa, Mastercard, Mercado Pago and Booking Holdings decided to duck out of the Facebook-led Libra cryptocurrency association.

In a speech on Wednesday, Brainard said it "should be no surprise" that the project is facing such a high level of scrutiny because it "combines an active-user network representing more than a third of the global population with the issuance of a private digital currency opaquely tied to a basket of sovereign currencies".

Among the issues Libra needs to address, says the governor, are compliance with KYC rules; demonstration of consumer protections; and efforts to define the financial activities that the various players in the Libra ecosystem are conducting in order for jurisdictions to assess whether existing regulatory and enforcement mechanisms are adequate.

More broadly, Brainard told her audience that global stablecoin projects such as Libra could challenge bank business models. "If consumers and businesses reduce their deposits at commercial banks in favor of stablecoins held in digital wallets, this could shrink banks' sources of stable funding, as well as their visibility into transactions data, and thereby hinder banks' ability to provide credit to businesses and households," she suggested.

Stablecoins could also have implications for central banks and monetary policy: "If a large share of domestic households and businesses come to rely on a global stablecoin not only as a means of payment but also as a store of value, this could shrink demand for physical cash and affect the size of the central bank's balance sheet."

On central bank digital currencies, Brainard struck a cautious note, arguing that there are "compelling advantages" to the current system and that a switch would raise "profound legal, policy and operational questions" around issues such aqs privacy.

Despite the setbacks, Facebook is pushing ahead with the project, holding a meeting earlier this week with the 21 remaining members of the Libra Association and electing a Board of Directors, and appointing members of the Libra Association executive team. David Marcus, who is leading the Libra effort, pointed out that 1500 other firms had expressed an interest in joining the initiative.

"It was energizing to see reps from many different industries, and interests come together with one mission at heart, improve access and lower costs to digital money and financial services for everyone," he posted on Twitter. "Change of this magnitude is hard. You know you’re on to something when so much pressure builds up."