Chinese regulators believe that in case Libra does not follow the international foreign exchange regulations it should be banned.
The chief accountant of China’s State Administration of Foreign Exchange (SAFE), Sun Tianqi, believed that welcoming Libra could open emerging markets to threats like illegal transfers, money laundering, and it could also take away the control of a state over its capital. He 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.
Sun called out the governments of these emerging markets to look closely into the matter and be well aware of what happens when Libra is launched. According to Sun, the governments should impose strict regulations where domestic transactions should not be replaced by Libra, or else it could take over economies of countries, in which case it should be banned.
The strong opinion on Libra doesn’t necessarily mean that China is against any innovations in financial technology. The world is advancing fast towards a digital financial age, and to cope up with the speed, China is also launching its own digital currency soon.
The vice-chairman of CCIEE (China Center for International Economic Exchanges), Huang Qifan, even said that China’s central bank might be the first one to link blockchain into its financial system, launching its own digital currency before anyone else does in the world.
Mark Zuckerberg warned Congress about this pre-hand, that if Libra is not launched on the planned dates, China might outperform the US in the financial innovation sector. Huang also had a strong stance against Libra as he thought that such decentralized and unregulated currencies are purposed to challenge sovereign currencies. He thinks that the Libra project would not succeed.
Countries across the world have also educated themselves with the importance of digitizing financial systems. The Central Bank of Bahamas (CBOB) has also decided to run in the race of innovation in financial technologies and has announced that they want to make the country free from cash dependency.
They have specifically highlighted that natural disasters cause a lot of nuisance for banks and for people who lose a lot of money in the process. Bringing in a stable blockchain-based fiat currency would solve the issue of recoveries if regulated properly with strict policies to prevent money laundering, terror financing, and other illicit activities.