Facebook’s Libra electronic money scared China, urging the bank to issue its own money

Tram Ho

China fears Facebook’s virtual currency Libra will pose many challenges with cross-border payments, monetary policy and even financial sovereignty. In particular, China is concerned about the rise of the US and the US dollar, with a series of economic, financial and even political consequences.

An official of the People’s Bank of China said that Facebook’s announcement to launch its own electronic currency has pushed China’s central bank into force to promote research to create technical currency. own numbers, because Facebook’s Libra virtual currency can pose many challenges with cross-border payments, monetary policy and even financial sovereignty.

“If Libra is widely used for payments, especially cross-border payments, it can act as a real currency and therefore have a great influence on monetary policy, financial stability and is the international monetary system? ”said Wang Xin, research director of People’s Bank of China (PBOC).

According to Chinese newspaper South China Morning Post, PBOC is paying close attention to Facebook announcing plans to create electronic money and a financial infrastructure project based on the blockchain.

The PBOC is the first major central bank to study digital currencies in 2014, a step to combat electronic money challenges like bitcoin. They established a separate research organization in 2017 to further promote this research activity.

China still maintains a ban on digital currency transactions, including bitcoin, because Beijing considers digital tokens a source of financial risk. At the same time, China’s Central Bank expects a digital currency to be under their control, although so far there has not been much progress.

The concern is growing, that Facebook’s Libra digital money will promote a new international currency competition and financial sovereignty challenge. According to Facebook, Libra will be linked to a range of major currencies and run by a Swiss-based non-profit corporation, the Libra Association, which includes more than two dozen companies, including Visa, Mastercard , PayPal, Stripe, eBay and Uber.

“If the digital currency is closely linked to the US dollar, it can create a scenario whereby sovereign currencies will coexist with digital currencies. But actually there will be a boss, that is the US dollar and the United States. If so, it will bring a series of economic, financial and even international political consequences, “Wang warned.

To deal with Libra, many countries may be forced to issue their own central bank digital currency, develop Libra-like products or use a new international digital currency based on regulations of the International Monetary Fund.

The PBOC, after receiving approval from the Chinese State Council, worked with market organizations on the creation of a digital bank of the central bank, Wang revealed, however, no public announcement of progress.

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Source : 24h