China Fears Facebook Cryptocurrency, Central Bank Wants its Own
Facebook certainly rattled some cages when it announced its own cryptocurrency last month. A number of nations including Russia and China have expressed concern over the rising dominance of US tech and internet giants, especially if they’re aiming to manipulate finances as they currently do with data.
Crypto Community Unfazed, China Is
The crypto community has largely shrugged off Zuckerberg’s schemes on global financial domination. A centrally controlled stablecoin in the clutches of one billionaire and a bunch of tech monopolies is no real threat to the concept of Bitcoin and is decentralized brethren.
The People’s Republic of China, where Facebook is currently banned, thinks otherwise. This week the central bank said it was increasing research efforts into creating its own cryptocurrency as Libra could potentially pose a threat to Chinese cross-border payments, monetary policy, and even financial sovereignty. According to the SCMP, director of the PBOC’s research bureau, Wang Xin said;
“If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function like money and accordingly have a large influence on monetary policy, financial stability and the international monetary system?”
The report added that China’s central bank was the first to study cryptocurrencies in 2014 in an effort to counter the increasing threat of Bitcoin and others, which it banned in late 2017. Xin expressed concerns that those controlling Libra in addition to Facebook, namely a Switzerland-based consortium of tech and finance giants such as Visa, PayPal, Mastercard, eBay, would be dominated by US dollars.
“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 consequence.”
One way to battle the already all-consuming social network with its 2.3 billion user base, would be to encourage the development of cryptocurrency on local platforms.
Chinese social platform WeChat is about half the size of Facebook with 1.1 billion users. WeChat already has a payments system but like Libra it is completely centralized, in Yuan only and available through Chinese bank accounts. According to the firm, Tecent’s WeChat Pay launched in 2013 and has over 900 million users. Alibaba’s Alipay is its biggest rival but the group’s financial arm, Ant Financial, is the world’s largest privately held fintech company according to Forbes.
With its escalating anti-crypto stance, Bejing pressurized WeChat into banning cryptocurrency payments back in May. However, WeChat Pay does own payment licenses with Chinese regulators, and it remains unlikely if Facebook will be able to do the same in China and different countries that are wary of its dominance.
What has become clear is that the concept of Libra is a threat, not just to China, but to any other nations looking to distance themselves from the dollar and the US tech monopolies.
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Martin Young, Khareem Sudlow