China To Launch its Own Cryptocurrency To Counter Facebook’s Libra

To counter Facebook’s Libra and safeguard the country’s financial network, China’s central bank is working to launch its own cryptocurrency.

While discussing on the news reports, director of the People’s Bank of China (PBoC) research bureau, Wang Xin argued that “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?”

Furthermore, Wang stated that the bank chose to develop its own crypto currency mainly because there is no clarity on the stance of the US with regard to Libra.

“If the digital currency is closely associated with the U.S. dollar, it could create a scenario under which sovereign currencies would coexist with U.S. dollar-centric digital currencies. 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.”

It is needless to state that PBoC has received green signal from the State Council, the chief Chinese administrative authority, to join hands with other market participants and financial institutions to develop a central bank digital currency.

Academics have also initiated a digital finance program which includes resources from Peking University, Zhejiang University, Shanghai Jiao Tong University and Renmin University.

Interestingly, PBoC’s intention to create a central bank digital currency has come at a time when China continues to maintain a hard stance against cryptocurrency trading, with authorities implementing a blanket ban on Bitcoin (BTC) trading, initial coin offerings and cryptocurrency exchanges.

Notably, PBoC’s blockchain trade finance platform has handled more than 30 billion yen ($4.36 billion) in Forex transactions since the day of launch.