With Facebook’s Libra cryptocurrency potentially posing a threat to traditional money on various fronts, China’s central bank could hasten development of its own digital cash, according to a People’s Bank of China (PBoC) official.
Speaking at an event at Peking University’s Institute of Digital Finance, 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?”
As reported by the South China Morning Post, this risk means that the PBoC is looking at the situation with “high attention,” and could ramp up development of its own digital currency, which has been ongoing for some years. “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 confimed 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.