China’s SAFE Regulator: Libra Could Be Used For Mischievous Cross-Border Payments
A senior Chinese regulator, Sun Tianqi recently spoke about the Facebook’s Libra project. According to the Chief Accountant of China’s State Administration of Foreign Exchange, Libra needs to abide by the same kind of law that other foreign currencies do or it will be banned from the country.
According to Sun, countries that asses Libra could threaten state control over capital should ban the token, as it could make it much easier for criminals to transfer money around.
He affirmed that financial technology can bring innovation and efficiency to a market, but also that illegal cross-border transfers could be made if the technology is not properly regulated. It is because of this that all countries should be very concerned, especially in emerging markets, as they could be directly harmed by Facebook’s new stablecoin.
“Financial technology can promote the opening up, innovation and development of a country’s financial market, but it could also bring a lot of illegal cross-border financial activities. This should be a matter of great concern to all countries, especially emerging markets.”
Sun is also concerned that, in China’s case, people would stop use of the yuan in domestic transactions, which would limit the country’s ability to enforce economic policies, as people would be easily able to circumvent them.
For instance, the government can create a downward pressure on the yuan to boost exportation. With people using Libra instead, this would probably not be possible.
His comments are pretty much compatible with what other experts are confirming in China. Recently. Zhou Xiaochuan, a former governor for the People’s Bank of China, stated that projects such as the Libra would end up harming the Chinese economy and national payment systems. Wang Xin, head of research at the bank, was another figure that defended this idea.