China unveils central bank digital currency plans, sparked by Libra
Research commenced in 2014 in the face of declining cash use and now Libra has catalysed the announcement.
China’s central bank digital currency is a go, China Daily reports. The program has been approved by the State Council and is now moving forward.
The initiative commenced in 2014 under former governor Zhou Xiaochuan, in response to the declining use of cash around the country and the rise of digital payment systems. Now, with the reveal of Facebook’s Libra cryptocurrency, the People’s Bank of China (PBOC) has decided the time is right to move ahead on concrete plans for building and rolling out a national digital currency.
The reason Libra was the final straw was because it could challenge central bank monetary sovereignty.
It’s a genuine concern for the markets, said Li Zhenhua, executive director of Ant Financial Research Institute.
Libra was an “alarm” for the country’s regulators, said Huang Yiping, director of the Peking University Digital Finance Research Centre, and it served as the tipping point after which digital currencies could no longer be ignored.
Central bank digital currencies can act as a counter-balance to the pressure exerted by cryptocurrencies, explained Wang Xin, the director of the PBOC Research Bureau.
“From the government’s perspective, we pay more attention to [Libra’s] influence on financial services, monetary policy and financial stability,” he said. “We will keep a close eye on the new global digital currency.”
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