China joins the list of countries to ban Libra operations

Written by: Michael Harris
March 11, 2020
  • Libra operations are not welcomed in China unless it abides by the law for other foreign currencies.
  • China is working on launching a state issued digital currency.
  • Jack Dorsey, CEO of Twitter, stated that he has no plans of partnering with Facebook over Libra.

The CEO of Facebook, Mark Zuckerberg, had implored the U.S House of Representatives last week, that America has to up its game in the league of digital assets in order to maintain its financial leadership and compete well with the likes of China that is already working diligently to digitalize its currency. Zuckerberg was called into the U.S Senate to testify and defend the recently announced Libra cryptocurrency project by Facebook.

Libra Cryptocurrency May Promote Cross-Border Illegal Financial Activities

While the congressmen weren’t convinced of the need for Libra and called the cryptocurrencies in general, a threat to the sovereign currencies and traditional financial system at large, it seems that Zuckerberg’s comments weren’t received well in China either. Sun Tianqi, Chief Accountant for State Administration of Foreign Exchange (SAFE) in China, was recently reported stating that as long as Libra pledges to abide by the same law that is in place for other foreign currencies, its operations will not be welcomed in China. He further added:

“Financial technology can promote the opening up, innovation and development of a country’s financial market, 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.”

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Zhou Xiaochuan, who has previously served as the People’s Bank of China’s governor, has supported Tianqi’s statement and saw Libra as a threat to the national payment system and the economy at large. Head of research, Wang Xin, at the People’s Bank of China has been reported to keep a similar opinion as well.

Safe’s Remarks May Have Been A Retaliation To Zuckerberg’s Comments 

While the majority of the financial experts have construed the statements as SAFE’s genuine concerns for cross-border illegal financial activities that Libra may promote, others have been skeptic and called it a retaliation on China’s part to Zuckerberg’s remarks in the U.S House of Representatives.

It is, however, not the first time that Libra has been publicly criticized. The stronger economies of Europe, France and Germany had already declared last month that Libra operations will be banned in Europe. The Libra Association has been widely opposed within the United States of America as well with the likes of the CEO of Twitter, Jack Dorsey, recently commenting “Hell, NO!” to when he was asked if Twitter has plans of joining the Libra Association.

With major partners like PayPal, MasterCard, Visa, eBay, Stripe, etc. having bailed on the association, Libra has certainly been on rocky grounds in the past few months. As per the financial analysts, the current circumstances are hinting at an imminent delay in the launch of the new cryptocurrency by Facebook that was previously announced to be set for the second half of 2020.