By CCN Markets: We now know the reason why China’s central bank appears to be rushing to issue its “cryptocurrency” as quickly as possible. Beijing, reports suggest, is worried that Facebook’s Libra “cryptocurrency” will launch first.
According to English-language newspaper China Daily, the People’s Bank of China (PBoC) hopes to launch its state-run digital currency before Facebook gets the regulatory green-light to issue Libra, a blockchain token whose value will be stabilized by pegging it to a basket of assets.
Libra currently languishes in regulatory purgatory following an absolute beatdown on Capitol Hill last month. US politicians from Alexandria Ocasio-Cortez to Donald Trump attacked the social media giant’s cryptocurrency ambitions, and the Silicon Valley company’s numerous scandals have left it with few friends in Congress.
The PBoC, meanwhile, has been working on digitizing the yuan for at least five years, and in 2018 it began to pour significant resources into blockchain research. Earlier this month, a senior official revealed that the cash-substitute was "close" to being released.
But while Facebook promotes Libra as a tool to promote an open financial system (a claim many Bitcoin advocates find dubious), the PBoC likely plans to use its central bank digital currency (CBDC) to govern the financial system with an even tighter fist in its ongoing war against capital flight.
With Libra’s near-term future in doubt, Beijing has the opportunity to beat Facebook to the punch - and rip-off what it believes are the crypto project's most appealing features.
Specifically, the PBoC is intrigued by Facebook’s plans to issue Libra through a consortium of more than two dozen corporate partners.
Chinese regulators now plan to experiment with enlisting both state-run and private companies to “join the process together with the central bank,” Yang Dong, director of the Research Center of Finance Technology and Cyber Security at Renmin University of China, said.
"Further testing is needed before officially launching the Chinese CBDC, gaining inspiration from the Libra," Yang added.
The admission that Libra has had such a profound impact on China’s "crypto" plans is even more notable when you consider the source. China Daily is owned by the Publicity Department of the Communist Party of China. That doesn't technically make it “state-run,” but it’s effectively a government propaganda machine.
That says a lot about the Chinese government, but it just might say even more about Facebook.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.