A few weeks ago, Zuckerberg submitted a statement to Congress. In it, he warned that if US lawmakers did not act, China would act and take over the digital currency space. It would appear that he was onto something after all. While the US is still dragging its feet when it comes to federal legislation on the cryptocurrency space, China is already moving ahead with the launch of a CBDC.
China is Partnering with Chinese Tech Giants
In the US, Facebook has received a cold reception when it comes to its crypto project. Thus far, a few significant members of the Libra Association have abandoned the project. However, things are moving in the opposite direction in China. The central bank of China has already revealed that it will use a two-tier model to roll out its digital currency. As a result, it will need to work with major enterprises such as Tencent to roll out its digital currency.
Recent reports indicate that China is calling on Huawei to help it develop the blockchain for its digital currency. These reports are emerging just a short while after Xi Jinping, the president of China, said the nation wants to be a leader when it comes to blockchain technology. Thus far, no details of the deal have been released to the public.
It would appear that Zuckerberg’s ominous warning is coming true. He had called on Congress to support his project or lose to China in the financial sector. In the past few weeks, China has accelerated its plan to launch a digital currency; most experts believe this push was triggered by the announcement of Facebook Libra. The country was apparently afraid to lose control of its monetary policy to a private entity.
Besides digital currencies, Zuckerberg warned Congress that China could dominate the blockchain sector due to a lack of support by the US federal government. Zuckerberg has made it clear that even as the debate rages on in the US, China is not waiting. They are actively working to develop the technology they need to stay ahead of the game.
Few Details from China
Very little is known about the deals China has signed with Chinese-based firms. This is because the central bank and the firms themselves have not been talking about the deal much. Up to this point, it is not even known when China is going to launch its digital currency. While some predict it could happen next year, China might end up pushing that back to two years or even launching it at the end of this year. At this point, it is a guessing game.
One of the reasons why China might go ahead with its plans is that it wants to increase the use of the Yuan around the world. By availing it on digital devices such as phones, it could potentially expand the reach of the Yuan. It could reach places in SE Asia and other developing nations where the banking infrastructure is not as developed.
Image Source: Shutterstock