China’s Central Bank Says Libra, Stablecoins A Threat To Yuan

With the worldwide use of Facebook’s Libra, as well as other stable coins, the international development of China’s yuan could be hampered. Also, they could lead to fluctuating asset prices and weaken the impacts of capital controls, Reuters reported, citing the central bank’s vice governor, as reported by Xinhua.

In a separate report, Changchun Mu, who leads the People’s Bank of China’s (PBOC) digital currency research subsidiary, noted that the digital currency of China will not require a currency basket to keep a staple value. The Digital Currency Research Institute has reportedly been at work on a digital yuan, or the Digital Currency Electronic Payment (DCEP), over the past five years.

Mu has reportedly noted that the digital yuan would stand out from other forms of digital currencies, with the inclusion of Libra. Mu said per the report, “The [digital yuan] currency is not used for speculation. The RMB is used to spend, not for speculation. It does not have the characteristics of bitcoin speculation, nor does it require the currency basket assets to support the value of the currency like stable currency.”

According to the report, it is not clear if the PBOC has another mechanism for tying the digital yuan’s value to the renminbi.

In separate news, FinTech company SPEZA announced that it will be able to accept China’s Digital Currency Electronic Payment (DCEP), which is said to be the globe’s first sovereign digital currency. The Malaysia-based digital asset solutions provider, exchange operator and regulator, based in Malaysia, will also accept all major digital assets listed on SPEZA Digital Asset Exchange.

Edwin Alden V. Uy, CEO of SPEZA said in a past press release, “SPEZA is looking forward to working closely with the authorities and being among the first Digital Asset Exchanges in the world to adopt DCEP.”

According to past reports, in China, the central bank will debut a state-backed digital currency that will be first issued to seven institutions in that country.