Keeping in mind the Facebook’s Libra emergence, the Chief Executive Officer of the Chinese telecommunication giant, Huawei, has called on China to develop its own Libra. Not a privately-owned cryptocurrency, but a state-backed one. Talking to an Italian media outlet, L’economia, Ren Zhengfei replied to question regarding Libra allowing the U.S. to retain its hegemony and Libra’s access to the Chinese banks and companies:
Even China is able to issue such currencies, why wait for Libra? The strength of a state is greater than that of an Internet company.
This statement from the CEO of Huawei highlights the impact that a global cryptocurrency can have on the world. With Facebook’s mammoth user base, Libra cryptocurrency will directly touch a huge chunk of the human population and will make its own niche in global finance.
Facebook’s ambitious cryptocurrency project Libra has been making rounds in the world media since its announcement a few weeks ago. It is planning on exposing the world to a new kind of currency which will not be controlled by the banks.
If Libra is able to dominate the online currency market, it will become difficult for other companies or even countries to make their own place in this crypto-ruled market. Although Ren has called out the Chinese state itself, there are no clear signs whether Huawei will step up to launch its own “Libra-kind” cryptocurrency. It has been giving Apple a tough time already worldwide, targeting Facebook’s Libra might just not be a very bad idea.
Since Facebook already has a staggering user base of over $2.7 billion, Libra is taking its online monetary system even to the hands of the unbanked and the poor. Facebook is a U.S. based company and the launch of its currency might come off as troublesome for some countries “not-so-friendly” countries to the U.S.
Right now, Libra has been engulfed in its own regulatory issues in the U.S. Recently Congress hearings were also held by U.S. lawmakers in order understand the global currency network that is being proposed by Facebook so that better regulatory bounds can be put on it. It is hard to entrust a company with the task of running global financial operations without regulatory oversight.
Facebook itself has been engulfed in its own controversies in the past such as the Cambridge Analytica case. Although the social media giant has put out the timeframe of 2020 regarding Libra’s launch, regulatory scrutiny might push the release back as the CEO of Facebook Mark Zuckerberg has announced full-compliance with the lawmakers.
Although Libra is going to have pegs with multiple fiat currencies, it will still be able to penetrate the currency market of various countries. This will also put Libra in direct competition with the native currency of the country.
Since Libra is going to be pegged with the U.S. dollar, it might just contribute to consolidating the global hegemony of the USD if the native currency of a country is not supported by Libra. In such a case, countries face a serious threat of currency competition. The cryptocurrency world is surely set to disrupt the global financial order that has been in place for centuries.
China already has a more bound internet access for its citizens. Facebook is banned in the country and the Libra announcement has put questions forward regarding the future of Libra in the country. Seeing a lack of such a currency, China might just be propelled to launch one of its own.
State-backed cryptos can come into the picture if the cryptocurrency and blockchain world gets more acceptance moving into the future. For now, Libra is raising some serious questions regarding the global currency competition worldwide.