The Chinese Central Bank accelerates the development of its own crypto currency.
According to the People's research department director & # 39; s Bank of China Wang Xin, who made the announcement during a seminar at Peking University, the "digital yuan" development program was approved by the Chinese Council. country.
In its development, commercial structures are involved, so that new products are competitive in the market. The head of the Central Bank noted that financial regulators are closely monitoring the development of Libra's global digital currency, whose creation was recently announced by Facebook.
Previously, Deputy Director of the Bank of China's Payment and Transfer Department, Mu Changchun, wrote in Caixin's financial review that cryptocurrency, including Libra, needed to be regulated by the central bank.
Perhaps the possibility of the emergence of real international payment instruments has encouraged the Chinese government to accelerate their own work so as not to lose the opportunity to actively participate in the creation of a new global financial system. .
The Chinese authorities have worked for several years to develop their own crypto currency. Bank of China has 78 patents in the field of cryptocurrency and 44 other patents related to blockchain technology [blockchain].
Previously, Central Bank Deputy President Fang Yifei noted that digital yuan must eventually replace M0 monetary instruments [l’argent liquide en circulation]. Gradual neglect of cash is a striking global trend and is particularly noticeable in China, where cellular payments are already in effect in daily purchases of residents. Therefore it makes perfect sense that the Chinese government wants to make a full analogue in fiduciary yuan.
So far, little information is available about the progress of crypto-yuan manufacturing work. But after Libra's White Paper publication on Facebook, Chinese officials have worked hard.
What about the benefits of Libra?
The fact is that the Libra currency announced by Facebook is very different technically and conceptually from other cryptocurrency, including Bitcoin. Libra will be controlled by a consortium of dozens of large technology and financial companies, including Visa, Mastercard, Paypal, eBay, Uber and Lifts. The consortium will also be responsible for the process and publishing of new cryptocurrency. Libra is a "stable angle" which will be guaranteed by reliable assets: deposits and securities from several countries with a reliable currency.
In other words, Libra is considered a supranational payment instrument. SDR – special drawing rights – is the closest analog at the moment. But unlike this, Libra must be a very fluid exchange tool with cross-border payments that can be accessed by most of the planet's population, which will take a few seconds.
After the 2008 crisis, China has proposed to create a new global reserve currency based on the SDR to eliminate dependence on the dollar. That is why the concept of Libra attracts globally to China, explained to Sputnik Liu Dongmin, director of the World Finance Center at the World Economic and Financial Institute affiliated with the Chinese Academy of Social Sciences.
"From the point of view of maintaining the stability of the international monetary system, supranational currencies as the main means of international payments are a relatively good solution. Compared to sovereign currencies, this currency will further ensure the stability of global finance. But such projects have not been realized," added the expert .
The dollar hegemony in international payments has been criticized by many countries, including China. But the price attachment of various products and services with one single currency, dollars, is practical in international trade. The Libra concept, on the other hand, is true, but it can also create many problems.
For example, the White Paper shows that Libra currencies can easily be converted into fiduciary currencies. But the perpetrators of the management consortium are private companies that cannot physically provide sufficient amounts of money. Only central banks have this possibility, which is why Libra needs financial regulators to function normally, said Liu Dongmin.
"Central banks in various countries need to develop regulatory measures for Libra. Moreover, if this digital currency is promoted as a means of payment throughout the world. Because every global currency, whatever its basic principle, will have an influence on monetary sovereignty and the financial security of certain countries, for example, with regard to monetary sovereignty, global cryptocurrency can replace the weak currencies of some countries and gradually overthrow them Individuals will try to pay with a more stable world currency, which will put more pressure on prices national currency. "
National currency sovereignty can be far more effectively protected by creating national digital currencies that respond to current trends in financial development, experts say. If China launches a digital yuan, it will become the first national digital currency in the world guaranteed by a stable fiduciary currency.
Efforts to make national cryptocurrency have been carried out. For example, Venezuela has launched El Petro collateral with oil assets. But given the economic situation of Venezuela, El Petro can hardly claim the status of international payment instruments.
The situation with digital yuan is different. Crypto-yuan issued by the Central Bank of China, with all the technical advantages of cryptocurrency, can be properly trusted in the world market and significantly increases the level of internationalization of the Chinese currency. And if Libra or other supranational currencies are launched, China, with its experience and capabilities, can influence the adoption of new international financial system operating rules.