China’s Central Bank PBoC Plans For Its Own Cryptocurrency to Counter Facebook’s Libra
Ever since Facebook announced its Libra cryptocurrency last month, regulatory agencies across the globe have raised concerns on its possible impact on the global economy. As per Statista, Facebook has over 2 billion monthly active users, which shows its power to influence the global economy with its new cryptocurrency.
Citing imminent threats ahead with Facebook’s Libra crypto project, China’s central bank - People’s Bank of China is planning to have its own digital currency as a countermeasure. As reported by the South China Morning Post, a local PBoC official said that Libra could potentially challenge China’s cross-border payments, financial sovereignty, and monetary policy.
Speaking at an academic conference at Peking University’s Institute of Digital Finance, PBoC’s research bureau director Wang Xin said: “If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function like money and accordingly have a large influence on monetary policy, financial stability and the international monetary system?”
Similar thoughts were echoed by PBoC governor Zhou Xiaochuan at Beijing said that Facebook’s Libra has shown a “strong” demand for global cryptocurrency against the existing fiat structures. The governor said: “Libra has introduced a concept that will impact the traditional cross-border business and payment system”.
Note that China’s has been the first country to oppose these decentralized frameworks of currencies stating with introducing the Bitcoin ban in 2017. Since then, this Asian economic giant is banning everything related to cryptocurrencies and similar activities.
China’s measures don’t surprise us as it has been always opposing the entry of foreign tech companies in its borders. Thus, it’s no surprise that it surely won't want any external currency to enter its financial structure.
Furthermore, note that major tech giants like PayPal, MasterCard, Uber, Visa, and many others will be an active part of the Libra ecosystem. Thus, allowing Libra will be like giving indirect access to other companies as well.
To prevent dominance on any particular fiat currency, Facebook has already made clear that Libra will be tied to several fiat assets like USD, EUR, JPY, etc. But still, Wang Xin asserted that “If the digital currency is closely associated with the US dollar, it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies. But there would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences”.
Despite China opposing the entry of other crypto companies or tech companies involved with crypto projects, it very well knows that cryptocurrencies are here to stay. Local companies in China are already working in that direction.
Giants like Alibaba and Tencent are already working on digital payment networks in the country. Tencent, the parent company of WeChat has already introduced the native QQ Coin even before Facebook’s Libra launch.
Similar Alibaba already has already established its robust digital payment AliPay for the local Chinese people.