The Central Bank of China is reportedly preparing its own counter-cryptocurrency to Facebook’s Libra. After the white paper for Libra was released, the Chinese government is already rushing for an answer.
According to The South China Morning Post, China believes that Libra will be a potential threat to the country’s financial system.
The director of the People’s Bank of China (PBoC), Wang Xin, stated that the biggest problem of Libra is its relationship with the United States dollar.
The counter-cryptocurrency is developed because of Libra’s potential
According to Wang, the ability to be used worldwide for cross-border payments by an incredibly large user base is dangerous. He thinks that Libra will overnight, get huge influence on the financial stability and the international monetary system.
“If Libra becomes closely associated with the USD, it would create an unfavorable scenario for other sovereign currencies. These currencies would be forced to coexist with USD-centered cryptocurrencies. That means that the United States dollar would be king and such a development would have very negative financial, economic and political consequences.”
This is why, the PBoC’s counter-cryptocurrency will have its development accelerated. Reportedly, there’s already an approval from the State Council.
The PBoC will have to work together with other market participants and institutions in order to develop the counter-cryptocurrency.
Numerous Chinese academics have also expressed their desire to join the initiative. Researchers from Peking University, Renmin University and the University of Shanghai Jiao Tong along with significant resources will be used.
The Libra counter-cryptocurrency is being developed at a time when China is taking heavy measures against local crypto mining. There were recently government raids against the bitcoin mining farms in the Sichuan province.
If Libra finds the success it’s gearing up for, a Chinese response will be inevitable. Most experts however, believe that Libra will not see much success and will not acquire the userbase it wants.
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