Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

China warned not to rush into creating digital currency to rival Facebook’s Libra, instead join global debate

China warned not to rush into creating digital currency to rival Facebook’s Libra, instead join global debate

China has fast tracked development of its sovereign digital currency, but a former central bank deputy governor has urged China to think about its response. Central banks from Canada, Britain, Japan, and Sweden, as well as the European Central Bank, this week joined forces to look at ‘cases for central bank digital currency’

A new theory appears to be emerging in China with regards how it should cope with the potential challenges from Facebook’s blockchain digital currency Libra, with suggestions it should shift towards working with other nations to regulate the sector rather than fast-track its own alternative medium of exchange.

Debate continues over whether and how China’s central banks should issue its own digital currency, with concerns mounting that popularity of Libra may further enhance the dominant role of US dollar in the digital era.

China’s yuan is not expected to be included in the underlying assets of Libra, while the People’s Bank of China has cracked down on cryptocurrencies such as bitcoin, and has also seemingly made progress in developing a sovereign digital currency.

But Zhu Min, a former deputy governor at the People’s Bank of China, has urged China to further consider its response to Libra, which is backed by a group of hard currency assets and is expected to be launched this summer.

“I think it’s critically important to join the discussions and take part in coordinated global regulation of Libra,” Zhu was quoted as saying by Sina.com.

Zhu added that the central bank’s digital currency research scheme, officially known as Digital Currency Electronic Payment, is a “natural process”, suggesting that there is no schedule for the launch of China’s sovereign digital currency.

And Zhu is not alone in calling for a global regulatory framework covering digital currency that could involve China.

Ba Shusong, a former researcher at China’s State Council Development Research Centre, who currently serves as chief China economist for the Hong Kong stock exchange, said that a framework overseen by a multilateral institution is needed to monitor digital currencies such as Libra as they have the potential to reshape the global financial system and challenge existing national monetary authorities.



Many issues surround digital currencies because their usage is not limited to any single country, Ba told a seminar at the Asian Financial Forum in Hong Kong in January.

Ba warned, that with different countries at various stages of their economic and policy cycles, the rise of digital currencies could create tensions among central banks and regulators as digital currencies can make it difficult for central banks to manage their foreign exchange controls.

“You would need to first improve the regulatory framework for [financial] technology,” Ba added. “There is a need for global cooperation for an alternative regulatory framework.”

Ba said that Facebook’s Libra raised questions about how a project of its size should be regulated to guard against its potential use for illicit means including money laundering.

This week, Vodafone became the latest company to leave Facebook's digital currency project after backers including PayPal and Mastercard also left The Libra Association amid regulatory scrutiny from around the world.

“We will continue to monitor the development of the Libra Association and do not rule out the possibility of future cooperation,” a Vodafone spokesman said in a statement.

Earlier this week, the Bank of International Settlements announced that that it had created a group involving the central banks of Canada, Britain, Japan, and Sweden as well as the European Central Bank to “share experiences as they assess the potential cases for central bank digital currency”.

Hiromi Yamaoka, former head of the Bank of Japan’s (BOJ) division overseeing payment and settlement systems, said the decision was a sign of how Libra has triggered global competition among central banks to make their currencies more appealing.

“The latest decision [by the six central banks] is not just about sharing information. It’s also an effort to keep something like Libra in check,” said Yamaoka who, during his time at the BOJ, was directly in charge of negotiations on new technology.

“Something like Libra would make transactions costs much cheaper. Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Cheney Tsoi, president of the Asia Blockchain Society, argued that bitcoin, the most widely used cryptocurrency, is successful because of its “decentralised” nature.

The blockchain technology that underlies all cryptocurrencies allows individual holders of the currency to control its increase and distribution, with no central authority overseeing the process.



But for other less successful digital currencies, their recognition could be greatly enhanced if central banks were to introduce their own government backed and controlled digital currencies.

“Innovation starts with the private sector, but for big scale use, it will need government support. The introduction of digital currencies by central banks may bring about new usage. We see a good trend,” Tsoi said.

Zhu Jiang, general manager at Kingsoft Cloud, said that at the moment, the physical world and virtual world were in the process of converging.

Zhu added that digital assets could be instrumental tools in the future, but said they still need the backing of government policies.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
×