Facebook and China are committed to developing digital currencies that can compete with each other, especially in emerging markets.
But while Libra is having difficulties with the launch, China is ready to present an alternative. Analysts and industry leaders are discussing the geopolitical consequences of launching a rival cryptocurrency, especially if Libra fails to negotiate with US regulators.
Earlier this year, the People’s Bank of China announced that it was working on an RMB-based digital currency that was reportedly inspired by Facebook plans.
According to the deputy director of the payments department of the People’s Bank of China (PBoC), Mu Changchun, the cryptocurrency will be much like Facebook’s stablecoin Libra. National cryptocurrency is being developed to protect “monetary sovereignty and legal currency status” in the country.
According to the representative of the Chinese Central Bank, the “digital yuan” can be used on such large payment platforms as WeChat and Alipay. In addition, the official pointed out that the digital currency issued by private corporations could cause large losses for users if the organization issuing it will suddenly go bankrupt.
The digital currency of the Chinese Central Bank has no such risks and is comparable in terms of reliability with fiat money.
The national digital currency of China will ensure the safety of users’ personal data, but will not allow money laundering operations, Mu assures.
It is likely that the digital currency of the People’s Bank of China may appear earlier than the Facebook cryptocurrency project. A source from China Daily said that Libra’s announcement could influence the plans of the People’s Bank of China and force it to consider new models for implementing the instrument, where non-governmental institutions will play a more important role.
Ripple CEO Brad Garlinghouse commented on the upcoming stablecoin in China: “While the authorities are watching the innovative developments of other countries from the outside, the United States may miss the chance to become a leader in the global crypto space by allowing its main competitor to enter the market”.