A senior monetary expert has advised the Chinese authorities to slow down on their plans to launch a Central Bank Digital Currency. Zhu Min, a former deputy governor of the People’s Bank of China, thinks the authorities should reconsider the decision, according to the South China Morning Post.
Zhu thinks the central bank’s digital currency research scheme, known as Digital Currency Electronic Payment, should be a spontaneous process. Hence, he suggested that there should be no schedule for the launch of China’s sovereign digital currency.
“I think it’s critically important to join the discussions and take part in coordinated global regulation of Libra,” Zhu was cited saying. China, in response to Facebook’s Libra, is set to launch a digital currency this summer.
Global Regulatory Framework
Meanwhile, Zhu is not the only expert calling for a global regulative structure covering digital currency that could include China. Ba Shusong, Chief China Economist at the Hong Kong Stock Exchange earlier in January, stated that a framework supervised by a multilateral establishment is required to monitor digital currencies such as Libra.
Shusong, speaking at a seminar at the Asian Financial Forum, maintained that Cryptocurrencies could reshape the global monetary system and challenge the current national monetary administrations. He further stated several concerns encompass digital currencies since their usage is not confined to one nation.
The Chief Economist predicted that with diverse countries at multiple degrees of their economic and policy sequences, the growth of digital currencies could generate distress among central banks and regulators. It is his point of view that digital currencies can make it difficult for central banks to manage their foreign exchange controls.
“You would need first to improve the regulatory framework for [financial] technology. There is a need for global cooperation for an alternative regulatory framework. Facebook’s Libra raised questions about how a project of its size should be regulated to guard against its potential use for illicit means including money laundering.”
Libra And CBDC
In June 2019, Facebook’s announcement to launch a digital currency for global payments did not go down well with governments around the world. The decision even warranted a US Congressional hearing where Facebook’s Mark Zuckerberg testified.
Consequently, dozens of countries began looking into issuing their Central Bank Digital Currencies. China seems to have advanced with their initiative, and France is also in the process of doing the same.
A couple of days ago, Hong Kong and Thailand surprised the world with a publication of research, indicating the results of a CBDC tested on a cross-border transaction between the two countries. The outcome resulted in a successful Proof of Concept (PoC) of an instantaneous remittance across the two frontiers.