Facebook’s future cryptocurrency project scaled back this week. At the same time, local Chinese reports indicate the country is advancing notably on its CBDC.
Summarized information from this past week alone suggests the nation could be pushing the digital currency release as a response to Libra’s change of plans.
Libra’s Less Ambitious Plans
Facebook shook the world last year, announcing a “single global digital currency” dubbed Libra. Per Mark Zuckerberg, CEO of the social media giant, “more than a billion people around the world don’t have access to a bank account. But they could get through mobile phones if the right system existed… I believe that this problem can be solved, and Libra can help.”
Those ambitions plan that he shared with U.S. Congress, however, raised red flags amongst world regulators. They clamped down on the project, which had severe consequences on the Libra Association – the establishment behind the future cryptocurrency. Partners left, Facebook hinted Libra would be delayed and later announced a substantial change of the game plan.
Facebook unveiled the revamped designs officially last week, referred to by many as “Libra 2.0.” Now, instead of launching one single new currency, Libra considers creating a series of various digital coins. Each backed by a different government currency. The multiple coins will fluctuate depending on the current market events for physical currencies.
Another alternation implied removing the “permissionless” idea whereby anybody could help run the network without a central authority control. Instead, Libra will be a closed system in which only partners with the approval of the association can operate.
According to Christian Catalini, chief economist for the association, the new network serves as a “complement to traditional institutions.”
Libra Pressures China’s CBDC?
The latest developments surrounding Libra could be pushing China to act more rapidly in launching its own central bank digital currency (CBDC). For starters, the internet saw alleged screenshots of a test version application linked to the CBDC last week.
Local reports followed in the next few days hinting that the first public use case can occur next month. The Xiangcheng district of Suzhou will reportedly pay half the travel subsidies given to public sector workers digitally.
Additionally, an unnamed state bank, which is a part of the testing committee of the CBDC, has allowed some Communist Party members to pay their membership fees with the CBDC.
More confirmation of advanced testing developments came from the Digital Currency Research Institute of the People’s Bank of China. The agency in charge of the project informed that it’s conducting trial programs with state-owned banks.
The Institute added that pilot schemes would be held in four cities – Xiongan, Chengdu, Suzhou, and Shenzhen. Moreover, the 2022 Winter Olympic venues in Beijing could also be utilized to test the digital currency.
Despite those indications, the PBoC clarified that “it doesn’t mean that China’s sovereign digital currency is officially launched.”