The director of the People’s Bank of China (PBOC) research bureau, Wang Xin, has raised concerns about Facebook’s Libra cryptocurrency while speaking at an academic conference hosted by Peking University’s Institute of Digital Finance. He revealed that the central bank is paying “high attention” to Facebook’s effort and that PBOC is currently working with market institutions to develop a central bank digital currency.
Wang’s comments largely concerned Libra’s political effects, during his talk he said:
“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?
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.”
Several countries have been looking into cryptocurrencies for a while but none of them have really made much headway in the consumer space. Facebook is planning to launch its Libra cryptocurrency in 2020 and from its inception will have billions of existing users who are already signed up to Facebook services. Additionally, Facebook is partnering with Visa, Mastercard, PayPal, Vodafone, Uber, and others who will presumably accept Libra payments, giving it actual real-world use.
According to the South China Morning Post, China wants to see a currency that can be used globally based on Special Drawing Rights, the value of which is based on a basket of major currencies including the U.S. dollar, British pound, Chinese yuan, Japanese yen, and euro; China's ultimate response could vary based on which currencies end up backing Libra.