China is on its way to compete in the cryptocurrency market with its own digital currency as a way to assert its global competitiveness and to adapt its cross-border trade in the digital era, a senior Chinese foreign exchange regulator said on Sunday.
Lu Lei, a deputy head of the State Administration of Foreign Exchange (Safe), said that Facebook’s accelerating plan to launch its own digital money, or “golden currency” as Lu Lei refers to it, Chinese president Xi Jinping is pushing for China to launch its own crypto coin. Lu said that the possibility of the availability of Libra could hamper global trade and compromise the stability of global financial markets.
“We are not quite sure how new technology might evolve, but we must pay attention to control risk,” Lu said.
Earlier reports have revealed that the Central Bank of China has been capitalizing on developing its own cryptocurrency as part of the country’s legal tender. President Xi Jinping
said on Friday that China must speed up research and development of blockchain technology.
“Major countries are stepping up their efforts to plan the development of blockchain technology. Greater effort should be made to strengthen basic research and boost innovation capacity to help China gain an edge in the theoretical, innovative, and industrial aspects of this emerging field,” Xi was quoted as saying by Xinhua.
China has already given the go-signal for the PBOC to start with the next steps in developing its digital currency, said Wang Xin, director of the PBOC Research Bureau, during a seminar at Peking University back in July. He revealed that the central bank has been encouraging market-oriented institutions to help with the research and development of the currencies bid in the crypto market, under the approval of the State Council.
Additionally, Wang said that the CBDC would eventually mitigate and “counterbalance” the risks posed by Libra’s possible domination of the market. “A digital currency issued by the central bank can improve the efficiency of monetary policy, and help to optimize the payment system,” he said.
Another PBOC official also reiterated that with the growth of cryptocurrencies, government and central banks need to develop their own “more than ever,” and the development stage would be very “crucial.”