China's central bank is creating a cryptocurrency to challenge Libra

08 Jul, 2019
by Will Heasman
Adoption
China's central bank is creating a cryptocurrency to challenge Libra

According to a report by the South China Morning Post, China’s central bank (PBOC) may well be looking into an official sanctioned cryptocurrency in response to Facebook's foray into the industry…

The recent unveiling of the Libra White paper has got pretty much everyone from crypto enthusiasts to national governments hot and bothered for all sorts of reasons. Included in that rabble is China’s Central bank who, according to national media, is “stepping up the research” into creating a cryptocurrency to challenge Libra. Positing a question on Libra during an academic, Wang Xin, director of the PBOC asked :

“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?”

Taking the lead

According to Xin The bank is now paying “high attention” to Libra and its ongoing development, adding “We had an early start … but lots of work is needed to consolidate our lead.”

As reported Libra is backed by a combined basket of assets and currencies, which likely includes the US Dollar. The possible inclusion of the US dollar concerns Xie, who noted that USD association with Libra could bring on “political consequences.”

“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,” he said. 

Xie continued to confirm that a central bank digital currency (CBDC) was in the works after the PBOC received approval from the State Council. The PBOC is now apparently working with market institutions to bring the CBDC to fruition.

What do think about China’s proposed digital currency? Let us know your thoughts in the comments below!

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