The People’s Bank of China (PBoC) is reportedly considering to create a cryptocurrency for their 1.1 billion active monthly WeChat users. According to a report made by South China Morning on Monday, China is looking to review its almost two years ban on cryptocurrencies in the region.
The news came after China reportedly went against the Libra project in its region which must have instigated other countries like the US and United Kingdom to follow in their footsteps. However, disallowing Libra in China didn’t really end it all as the Chinese government saw a need to create its own cryptocurrency as a way to shut out any other digital currency from gaining any popularity among the Chinese.
During a conference at Peking University’s Institute of Digital Finance, Wang Xin, director of the Chinese central bank’s research bureau, expressed concerns that Facebook’s Libra could potentially make a challenge to Chinese cross-border settlements, monetary policy, and financial dominance. In his words,
“If Libra is widely used for payments … would it be able to function as money and accordingly have a large influence on monetary policy, financial stability, and the international monetary system?”
WeChat as an instant messaging platform has about 1.1 billion active monthly users and is the biggest in China. Seconded by Alibaba, WeChat has an already existing payment system called WeChat Pay which transacts in Chinese Yuan through Chinese bank accounts. This network of payment was launched in 2013 and has since then generated around 900 million users locally and globally, especially among travelers and Chinese expats.
With a user base just half of Facebook’s 2.3 billion monthly users, it is reasonable to assume that China is making a smart move in protecting a large number of potential Libra adopters which might be coming from the region.
Libra and WeChat Pay seem to have a lot in common. They both support peer-to-peer (P2P) mode of money transfer, as well as online and in-store payments. However, one of the differences that exist is that Libra was designed to allow a cross-border mode of payment while WeChat Pay is solely based on the Chinese Yuan.
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