China National Cryptocurrency May Launch Before Facebook Libra

On Aug 20, 2019

Almost all the possibilities and approaches of testing have been done for the new Chinese government-backed digital currency and can be launched before the official launch of Facebook Libra cryptocurrency, reported on 20 August 2019.

According to the report, the officials and experts said that private institutions’ participation and support is more than expected in the development and creation of new government-backed digital currency.

Central Bank Digital Currency (CBDC) is under trial in some areas, whereas Facebook Libra Cryptocurrency project is still waiting for regators green signal.

The central bank (People’s Bank of China) is almost ready to launch its own national Cryptocurrency after five years of research and development, Mu Changchun, deputy director of the central bank’s payments department revealed that the past week. Changchun further added that the development of China National Cryptocurrency started in 2018.

Experts believe that if the trials of Chinese government backed Cryptocurrency goes well, the Cryptocurrency will launch before Facebook Libra coin.

Yang Dong, director of the Research Center of Finance Technology and Cyber Security at Renmin University of China said that the original plan of China National Cryptocurrency is influenced by Facebook Libra Cryptocurrency project.

Facebook Libra Cryptocurrency ignite a flame in China regulators and developers, to rethink the model to include more non-governmental organisations in development and insurance of Central Bank Digital Currency (CBDC).

Yang further added:

“Further testing is needed before officially launching the Chinese CBDC, gaining inspiration from the Libra,”

The next pilots of using CBDC are non-governmental organisations and cross border payments. Multiple partnership including private and state owned companies to work with CBDC. Yang refused to disclose the name of any organisation or non-governmental bodies in the pilots.

Shao Fujun, chairman of China UnionPay and a former PBOC official, said that the potential plans of CBDC are under discussion. He said:

“It will have lots of positive impacts including tracking the money flow in economic activities and supporting making monetary policy.”

Shai explained that CBDC may face problems with cross border payments due to the international monetary and exchange rates policies.

Where we are now is just like in a horserace, when several designated institutions are taking different technical routes for developing the digital currency and electronic payment. The winner will be the one who has the best approach, accepted by the public and the market. So that is a process of market competition,” Mu said the digital asset must be under central bank control.

As Facebook Libra Cryptocurrency project whitepaper reveals the project is a stablecoin whose value will be pegged by multiple fiat currencies. Facebook Libra already partnered with 27 big players including MasterCard and Visa. Facebook aim is to have 100 member onboard before the launch in 2020.

The CBDC will fully controlled by central bank, and China’s residents can use it for buying and selling of services. The CBDC will be 100% backed by the reserve that commercial institution pay to central bank.

Facebook Libra and Chinese CBDC are quite similar in structure but have a basic difference. Chinese CBDC is controlled by a central government bank whereas Facebook Libra is controlled by a group of people (investors of Facebook Libra Cryptocurrency project).