China Issuing Digital Currency ‘Will Drive Bitcoin Adoption’
Bitcoin proponents predict that China’s decision to create its own digital currency will ironically drive massive BTC adoption.
China: Libra Dollar Peg Would Harm Sovereignty
As various media outlets including South China Morning Post (SCMP) reported July 8, China’s central bank said it was already in the process of building the digital token.
The impetus, sources said, came directly from Facebook unveiling the infrastructure for a cryptocurrency of its own, Libra, which will operate outside of the banking system.
“If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function as money and accordingly have a large influence on monetary policy, financial stability, and the international monetary system?” SCMP quoted Wang Xin, director of the People’s Bank of China (PBoC)’s research bureau, as querying.
The PBoC also revealed it had gained permission from Beijing to begin the process of designing the token. Concerns stem from Libra’s threat to Chinese cross-border payments and even financial sovereignty, due in part to Facebook potentially pegging it to the US dollar.
While Libra has not yet issued or even created any tokens, governments, and banks the world over are monitoring it, including the PBoC, which is paying “high attention.”
“If the digital currency is closely associated with the US dollar, it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies,” Wang continued.
“But there would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”
Bitcoin Will Benefit From China
While Wang did not mention decentralized cryptocurrencies, commentators subsequently argued Libra would draw attention to Bitcoin 00, which would add to the PBoC’s nightmare.
“Agree this will ultimately drive Bitcoin to accelerated adoption,” Morgan Creek Digital co-founder Anthony Pompliano wrote on Twitter following the news.
As Bitcoinist reported, China’s concerns over Libra may end up unwarranted if regulators elsewhere succeed in throttling further development.
This month will see dialog open between Facebook and the U.S., where lawmakers have already requested a halt to activity pending further details.
Elsewhere, other sources have delivered grim predictions for the project, with one economist stating that Russia would automatically ban not just the token, but all Facebook-owned platforms should issuance to users go ahead.
Moscow subsequently said it would not issue new legislation governing Libra while appearing unfazed by the idea anyone could use it to avoid the banking system.
China meanwhile maintains a blanket ban on trading cryptocurrency, something users are nonetheless seeking to circumvent using methods such as over-the-counter (OTC) platforms and stablecoin Tether.
The country previously saw premiums for purchasing Tether in USD terms, underscoring investor demand as Bitcoin soared in value this year.
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