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China to launch its own digital currency ahead of Facebook’s ‘Libra’

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BEIJING: People’s Bank of china (PBoC), last month announced that it is almost ready to launch the country’s digital currency in a bid to counter Facebook’s planned launch of its own ‘real asset backed’ digital coins, ‘Libra’.

Mu Changchun, deputy director of the People’s Bank of China’ (PBoC)’s payments department, said earlier this week, “The Chinese digital currency is to protect our monetary sovereignty and legal currency status. We need to plan ahead for a rainy day.”

Mu added that this was why the PBoC is “still doing such a digital currency today when electronic payment methods are so developed.”  According to Mu, the currency aims to strike a balance between allowing anonymous payments and grappling with money-laundering.

He said that the Chinese digital coins, which would be as safe as the PBoC-issued paper notes, could even be used without an internet connection, something that will allow transactions to continue in emergency situations.

The Chinese digital coins could also be used on WeChat messenger as well as Alibaba-backed Alipay.

According to sources, PBoC has been working on digital currency for the last five years and it may unveil the currency as soon as 11 November.

In June, Facebook had announced that it plans to launch its own digital currency Libra by 2020 in a move that would allow its billions of social media users to conduct international transactions.  According to Facebook, Libra will be “fully backed by a reserve of real assets.”

The social media giant expressed hope that its new digital currency will help resolve the problem of inaccessibility of “even basic financial services” that many people across the world face.

A Facebook statement noted, “Almost half of the adults in the world don’t have an active bank account and those numbers are worse in developing countries and even worse for women. The cost of that exclusion is high, approximately 70 % of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees.”

Fidelity, a US financial services company, is also establishing a digital currency, with Microsoft, Starbucks, and Intercontinental Exchange (the owner of the New York Stock Exchange) showing support for a cryptocurrency proposal called Bakkt, meant specifically for digital assets.  Bakkt is expected to emerge in the coming months.

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