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Director of PBOC research bureau says Libra could impact monetary policy, and China is preparing

July 8, 2019, 1:33PM EDT

Wang Xin, director of the People's Bank of China research bureau, said Facebook's plans for its crypto could impact global monetary policy, and the central bank in response is looking into creating its own digital currency.

The South China Morning Post reported Wang's comments today, who said the PBOC is paying "high attention" since the release of the Libra white paper last month. However, this is not the bank's first foray into crypto research. The central bank began studying digital assets in 2014 in an effort to keep up with bitcoin, according to the SCMP.

In the meantime, China does not allow new listings or trading of digital currencies, including bitcoin, since tokens are seen as a risky endeavor. 

In terms of Libra, Wang said he takes issue with the crypto's close correlation to the U.S. dollar. While the coin will be pegged to a basket of currencies, Wang said he worried other sovereign currencies would bear financial consequences of a U.S. dollar-focused currency, mainly, U.S. control over a leading digital currency.

In order to compete, Wang says, other countries would have to develop their own central bank digital currencies or look to intergovernmental organizations like the International Monetary Fund to set up an international digital currency based on an agreed upon basket of currencies.

Amidst Libra concerns, the PBOC continues to work on creating its own currency, but SCMP reports it has not made any public announcements of progress.

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