- Facebook’s Libra creating a risk for Chinese Yuan
- China’s central bank PBoC allegedly developing its own digital currency in response to Libra
China’s outlook towards cryptocurrency shows a complete unenthusiastic and downbeat reaction from many years. In Sep 2017, the Chinese regulatory authorities initiated the complete ban on initial coin offerings and operations related to digital assets completely. This act resulted in the shift of many recognized and established crypto ventures in different cryptocurrency-friendly nations like Singapore and Malta due to the strict rules and unacceptable regulations.
Bitcoin [BTC], Facebook’s Libra, and China
Indeed China is against the crypto revolution and believes that digital currency like Bitcoin or Libra can harm the rigid capital rule which the Chinese government has set in the country and enjoying the legitimacy from 1949. Digital currencies are recognized by the nation’s government as disintermediated and the frictionless circulation of value that can destroy the economic strategies and cultivate money laundering issues on a larger scale.
Last month in June, In a statement, the People’s Bank of China (PBOC)– the central regulatory authority that legalizes financial institutions and drafts the monetary policy of the nation, said that “PBoC would block access to all domestic and foreign cryptocurrency exchanges, ICO websites news portals… and cryptocurrency trading activities wouldn’t be welcomed even on foreign exchanges.”
On July 9, former PBoC Governor during 2013-2018, Xiaochuan Zhou cited the negative stance that Libra can impose on China, in a tweet presented by cnLedger- a cryptocurrency and blockchain Chinese twitter broadcast account:
“Libra represents the trend of digital currencies, China should take precautions against it” because people’s believe in Libra would be “inseparable” like an existing “global dollarization trend” due to its huge user base and popularity. He stated that it is imperative to “maintain a strong monetary status in China” with the aid of rigorous policy research while taking precautions.
Further, Zhou also believes that Libra would possibly face various challenges like “anti-money-laundering compliance, anti-terrorist financing responsibilities, and fund custody.”
“There are chances to emerge more internationalized, globalized currency in future. A currency which can be so strong that would cause major currencies to establish exchange relations with it.” Notwithstanding and aside from Libra, there would be “more institutions and people try creating it.”
On Dec 9, 2018, South China Morning Post (SCMP) published the antagonistic reactions of a current Central bank (PBoC) deputy governor, Pan Gongsheng countering cryptocurrency business.
According to Gongsheng, Security Token Offerings (STO) like Initial Coin Offerings (ICO) offering are another but similar business model backed by tangibles such as assets, profit or revenue of a company that is again an illegal financial and criminal activity in mainland China.”
Facebook Coin Libra and Chinese Authorities
SCMP, on July 9, spread the upcoming footsteps of Chinese authorities and outlined the apprehensions and anxieties of the overseers which became the catalyst for taking strong measures to control its own economy instead of somebody from outside which can majorly impact on monetary policy and financial stability of China.
The director of the People’s Bank of China research bureau, Wang Xin said that,
“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.”
Reportedly, Wang Xin said that the PBOC, after receiving approval from the State Council, is in the process of functioning on developing a central bank digital currency with market institutions.
On June 18, after launching Libra white paper Facebook is constantly encountering various questions and opposition against Libra’s working, benefits and negative consequences on the world economies.
On July 2, The United States House of Representatives Committee on Financial Services asked through a letter several hearings from Facebook CEO Markzukarberg and other Facebook’s representatives David Marcus, and COO Sheryl Sandberg.
Also, the partners are officially requested by the lawmakers to stop working on further activities and development of Libra stable coin and its dedicated Calibra wallet until the case has been examined and addressed successfully.
Tags: China economy, People’s Bank of China (PBoC), Facebook, Central Banks, Cryptocurrencies, Fiat Currencies, Yuan, Digital currencies, US-China trade war, China economy, Bitcoin, Digital currencies, People’s Bank of China, Libra, Stable coin, Anti Money Laundering, Wand Xin, Pan Gongsheng,