Chinese Official Warns Libra Could Bring ‘Lot of Illegal Cross-Border’ Transfers

Libra must submit to worldwide foreign exchange guidelines or “it should be banned,” a senior Chinese regulator stated on October 28. 

The chief accountant of China’s State Administration of Foreign Exchange (SAFE), Sun Tianqi, made the remarks in a speech to the Bund Summit in Shanghai, as per a report by Reuters.

Sun called after developing market governments to think about checking Libra’s development, particularly if the stablecoin initiative would undermine a state’s capital controls or empower illicit exchanges.

“Financial technology can promote the opening up, innovation and development of a country’s financial market,” stated Sun, “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’s worry lies with a foreign cryptocurrency superseding the yuan in domestic exchanges, which would restrict the state’s capacity to uphold capital controls and foreign exchange management. Presently, the People’s Bank of China (PBoC) applies downward pressure on the yuan, debilitating it against other significant currencies to boost export trades.

The remarks are in accordance with public statements from other Chinese regulatory authorities on the Facebook-driven effort.

In July, the previous governor of the People’s Bank of China Zhou Xiaochuan stated Libra represents a risk to payment frameworks and national currencies. Wang Xin, lead of the research department at the PBoC, said Facebook’s initiative had prodded development of China’s “digital yuan,” first proposed in 2014.

On Friday, President Xi stated to “seize the opportunity” presented by blockchain. A recent registration rundown released by the Cyberspace Administration of China, shows that the creation of blockchain applications in China is progressing rapidly, with over 500 enterprise ventures already in progress.