The potential impact of Facebook releasing its recently announced digital currency, Libra has remained a hot topic of financial regulators and central banks around the world.
According to a Monday report by South China Morning Post, the latest central bank official to talk about Libra and its effect is Wang Xin, director of the People’s Bank of China (PBoC) research bureau.
Xin was reportedly speaking at an event at Peking University’s Institute of Digital Finance and had only warning messages regarding how Facebook’s Libra would affect the Chinese cross border transfers, monetary policy, and financial stability.
He asked regarding Libra,
“Would it be able to function like money and accordingly have a large influence on monetary policy, financial stability, and the international monetary system?”
Regarding these potential loopholes, Xin acknowledged that the People’s Bank of China is paying “high attention” to developments around Libra and would potentially hasten the launch of a central bank backed digital currency (CBDC) to counter any threats.
He, also suggested that any potential moves could depend on which basket of fiat currencies Facebook eventually chooses to use as a reserve for its cryptocurrency as stated in their whitepaper.
Regarding this, Xin commented,
“There would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial, and even international political consequences.”
Conclusively, the bank official failed to provide a possible timeline for the launch of the PBoC. He only noted that they have been working with market institutions on the creating of such as digital currency, even though they are yet to release any public report regarding its progress.
Meanwhile, we also recently reported that Cuba is also planning a state-backed cryptocurrency.