By
Chimamanda U. Martha
April 12th, 2024
When the U.S. sneezes the rest of the world catches a cold, and this time around the cold has caught up with China. The technology powerhouse is shivering over the threat that Facebook’s Libra could pose on her national cryptocurrency.
With Facebook’s Libra virtual coin potentially posing a nightmare to fiat money on a different front, the central bank of China could fasten creation of its own virtual currency, says an official from People’s Bank of China (PBoC).
The leader of the research bureau at the PBoC, Wang Xin, indicated that if Libra becomes largely accepted for global transactions and effectively acts like real cash:
“Would it…accordingly have large influences on monetary policy, financial stability and the international monetary system?”
High Attention Observation
The South China Morning Post reported that this threat indicates that the PBoC is observing at the issue with “high attention” and could intensify the creation of its own virtual coin, which has been in progress over the years. Wang said:
“We had an early start…but lots of work is needed to consolidate our lead.”
Facebook launched its Libra project mid last month to be organized as stablecoin connected to government bonds and a basket of traditional manual currencies.
Wang revealed that her mother country, China needed to understand exactly which currencies stablecoin would be backed by, and if the United States dollar would add some impact, according to the report.
Relationship between Dollar and Facebook’s Libra Coin
If Libra digital currency is closely linked with the U.S dollar, it could entail that the country’s fiat currencies would function alongside. Speaking at a ceremony at Peking University’s Institute of Digital Finance termed this close link as “US dollar-centric digital currencies.”
Furthermore, Wang went ahead to courageous warn the world and especially, social media savvy firm that China wouldn’t tolerate that technological bubble, indicating:
“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.”
The head of the research bureau at the PBoC cleared the air by revealing that the institution had been partnering with market organizations on designing its central bank virtual coin. However, there is still an absence of clear road-map on how far the project is nearing its completion.