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’

4-MIN READ4-MIN

China’s yuan is not included in the underlying assets of Libra, and the People’s Bank of China has seemingly made progress in developing a sovereign digital currency. Photo: Reuters

Published: 8:00pm, 26 Jan 2020Updated: 4:54pm, 21 May 2020

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 Min

“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.