Quick thread on #China response to #Facebook #Libra. It is the greatest threat to Chinese fintech dominance now and they know it. CN tech firms have not yet gained many users internationally, unlike US tech. US tech has not, however, had fintech success of Alibaba/Tencent 1/n
2/n In response they are speeding up central bank digital currency plans with Ant Financial, and even raising the possibility of loosening domestic cryptocurrency regulation to ensure there is a Chinese competitor. My primer on CN crypto regulation: piie.com/blogs/china-ec…
3/n They warn, rightly, that many people might dump unstable local currencies for Libra, which could lead those currencies to fall and disrupt economies. But of course, they want to warn other countries against allowing an American firm to design a currency used internationally
4/n In big suprise, PBOC research director said the IMF may be forced to issue own supranational digital currency, which one imagines would ensure CN not beholden to USD or American companies like FB. This would be a big move, long anticipated, to weaken dollar dependence
5/n Two PBOC officials are already calling for international regulation, probably to bog FB down in regulations (however justified) while they push ahead in China. In any case, Libra has little chance in CN because FB is blocked. Would have no ecosystem to plug into.
6/n Former PBOC governor Zhou had fascinating comment about the race being on to create "a currency that's more conducive to globalization" It's not too far from saying that a supranational currency might be inevitable in our globalized world.
7/n my piece on China's digital currency plans, the anti-bitcoin piie.com/blogs/china-ec…
Libra's success is far from certain, but it has big advantages in international user base, market power, and relationships with companies that make it the most likely challenger to CN fintech dominance. I don't think, however, it needed to create own currency do to so. FIN
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