A Chinese senior regulator is of the opinion that Libra must be made to abide to international foreign exchange regulations or “it should be banned”.
Sun Tiangi Chief accountant of China’s State Administration of foreign exchange (SAFE), made the comments in an address to the Bond Summit in Shanghai according to a report by Reuters. Sun called upon emerging market governments to consider curtailing Libra’s rise especially if the stablecoin project was going to threaten a state’s capital controls or enable illegal transfers.
“Financial technology can promote the opening up, innovation and development of a country’s financial market,” said Sun, “but it could also bring a lot of illegal cross-border financial activities. This should be a matter of great concern to all countries, especially emerging markets.”
Sun’s big concern is the possibility of a foreign digital currency supplanting the Yuan in domestic transactions. This to him would limit the state’s ability to enforce capital controls and foreign exchange management. At the moment, the people’s bank of China (PBoC) puts downward pressure on the Yuan, weakening it against other major currencies in order to boost exports.
These comments are similar to those given by other Chinese regulatory officials on the controversial Facebook-led Libra project. Back in July, the former governor of the People’s Bank of China Zhou Xiaochuan said Libra was a threat to payment systems and national currencies. The PBoC’s head of the research bureau said that Facebook’s Libra project has spurred the development of the “digital Yuan”.
Just last week, China’s president Xi gave a speech that was favorable to crypto. That move was seen as China seizing the opportunity afforded by Blockchain. A recent registration list published by the Cyberspace Administration of China shows that development of Blockchain applications in China is advancing quickly. There are currently 500 enterprise projects that are already underway.
Twitter-based Chinese publication cnledger also reported that senior Chinese officials were also deleting any anti-blockchain sentiment they had put out on social media.