The powers that be in China seldom listen to advice from any outsiders. One former central banker, however, thinks that global cooperation is needed, especially in response to Facebook’s Libra.
China has fast-tracked the development of its central bank digital currency (CBDC), primarily over fears that Facebook could dominate if it gets there first.
The platform is currently banned in the People’s Republic which favors its own highly censored and monitored social media platforms. Any digital currencies from any private companies are also likely to be banned there too.
Will China Cooperate and Regulate?
A new theory is emerging that China should shift towards regulating the sector rather than fast-tracking its own digital yuan. According to the SCMP, a former deputy governor at the People’s Bank of China has urged further consideration to its response to Libra.
Zhu Min told local media;
“I think it’s critically important to join the discussions and take part in coordinated global regulation of Libra,”
He added that China’s CBDC or DCEP (Digital Currency Electronic Payment) is a natural process, however, no official launch date has been set.
A former researcher at China’s State Council Development Research Center, currently serving as China’s chief economist for the Hong Kong stock exchange, has also called for a global framework regulating any cryptocurrencies that could impact China.
Ba Shusong told a recent seminar at the Asian Financial Forum in Hong Kong that Libra has the potential to reshape the global financial system many challenges to existing national monetary authorities will arise.
He added that countries working on digital currencies at different paces could create tensions among central banks and regulators and make it difficult to manage foreign exchange controls.
Facebook, a Global Threat
The former head of the Bank of Japan’s division overseeing payments and settlement systems, Hiromi Yamaoka, stated that Facebook had triggered a global competition between central banks and a race to launch their own sovereign digital currencies.
He said in response to last week’s news that a number of major European central banks were considering collaboration with CBDC research.
It is highly unlikely that China will heed any advice, even from their own bankers, but the crux of the issue is that they are still clearly very concerned over Facebook’s cryptocurrency plans.