In response to Facebook’s Libra digital currency, the world’s second largest economy, China is planning to launch its own digital cash.
A major executive at the People’s Bank of China, PBoC, said the impending launch of Facebook’s Libra will spur China to hasten the development of its own digital currency which doesn’t have a name for now.
At an event organised by Peking University’s Institute of Digital Finance earlier on Monday, Wang Xin, head of the research bureau at the PBoC, said if Libra becomes widely used for international payments and effectively acts like money, “would it … accordingly have a large influence on monetary policy, financial stability and the international monetary system?”
“We had an early start … but lots of work is needed to consolidate our lead,” Wang said.
Facebook’s Libra project was revealed in mid-June to be planned as a stablecoin linked to a basket of fiat currencies and government bonds.
Wang indicated China needed to know precisely which currencies those would be, and whether the U.S. dollar would play a role, according to the Post.
If Libra is “closely associated” with the dollar, it could mean that national fiat currencies would work alongside “US dollar-centric digital currencies,” according to Wang.
He warned that China wouldn’t take that lying down, saying:
“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.”
Wang confirmed that the PBoC had been working with market institutions on developing its central bank digital currency, according to the report. However, there is still no indication of how close it is to completion.
Facebook said it plans to unveil its digital currency by 2020 under the umbrella of its Libra Association.