Former People’s Bank of China Deputy Governor, Min Zhu, insisted on the importance of China joining other nations in the global discussion on how to regulate Libra cited an article emanating from the South China Post. He said,
“I think it’s critically important to join the discussions and take part in coordinated global regulation of Libra.”
Meanwhile, he hasn’t been alone as Ba Shusong, a former researcher at China’s State Council Development Research Centre, was worried about how a project of Libra’s magnitude could be regulated to prevent its misuse as an illegal front for money launderers. He called for the need to first improve the regulatory framework for financial Technology while calling for global cooperation for an alternative framework. Ba Shusong currently serves as chief China economist for the Hong Kong stock exchange said,
“You would need to first improve the regulatory framework for [financial] technology. There is a need for global cooperation for an alternative regulatory framework.”
International organizations such as the G7 working group is steps ahead in evaluating and regulating the significant impact Libra would have in global financial systems as central banks and financial institutions provide guidance on the regulation of stablecoins.
With China also on course to creating their own digital Yuan also known as Digital Currency Electronic Payment (DCEP), with reports showing they had completed their first tests on Jan 10th. However, there is no specific timeline as to the launch date.
Digital Yuan under threat from Libra
China’s digital Yuan is set to suffer setbacks if Libra prevails both domestically and abroad. Like many other central banks, the PBoC is worried that they will lose their ability to implement their monetary policies if Libra gains momentum. The Yuan hasn’t been included in the basket of currencies on which the Facebook-led Libra is pegged. Also with the USD partly backing Libra would move only solidify the USD’s position in the international financial systems hence dwarfing China’s attempt to make the Yuan stronger internationally.