China To Push Its National Digital Currency Due To Facebook Libra Threat
Facebook’s Libra cryptocurrency has been seen as a potential threat to traditional money ever since its formal announcement, joining the league, China’s central bank could hasten the development of its own digital cash, according to a People’s Bank of China (PBoC) official.
Wang Xin, the head of the research bureau at the PBoC spoke at an event at Peking University’s Institute of Digital Finance earlier on Monday asserting that Libra could be widely used for international payments, effectively acting like money, “would it … accordingly have a large influence on monetary policy, financial stability, and the international monetary system?”
The South China Morning Post reports that looking at the risks involved PBoC it treating the situation with “high attention,” wherein they could ramp up development of its own digital currency that has been ongoing for some years. Wang said:
“We had an early start … but lots of work is needed to consolidate our lead.”
First revealed in mid-June, Facebook’s Libra project is a stablecoin linked to a basket of fiat currencies and government bonds. As per Wang, the country needs to know precisely which currencies those would be, and whether the U.S. dollar would play a role, according to the Post.
Wang adds that if Libra is “closely associated” with the dollar, it could mean that national fiat currencies would work alongside “US dollar-centric digital currencies.” He warned that China wouldn’t take that lying down, saying:
“But there would be in essence one boss, that is the U.S. dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”
Wang confirms that PBoC has been working with market institutions so as to develop its central bank digital currency, though there is no indication about its time frame.
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