David Marcus, Facebook’s top executive on the Libra project, said China will create a digital currency system that could be entirely out of reach for U.S. authorities.
Marcus warned that Washington risks “having a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency,” according to an interview with Bloomberg News.
“The future in five years, if we don’t have a good answer, is basically China re-wiring” a large part of the world “with a digital renminbi running on their controlled blockchain,” Marcus said.
China has been stepping up its efforts to push forward with its Digital Currency Electronic Payment (DCEP) since Facebook’s unveiling of Libra in June.
Chinese central bank officials have emphasized that one of the goals for China’s cryptocurrency is to preempt the rise of Libra that would reinforce the dollar dominance in the international financial system.
While Libra would be pegged to a basket of fiat currencies, excluding China’s renminbi, one of the five reserved fiat currencies accepted by the International Monetary Fund (IMF) for international transactions.
China’s DCEP had been in the works, but the project’s development accelerated after Libra was announced.
The People’s Bank of China appointed Mu Changchun to lead the Research Institute on Digital Currency in September and detailed a proposal to launch and distribute the national coin among major Chinese commercial banks.
Facebook’s crypto initiative has met with resistance from the U.S. Senate and the Federal Reserve, since it was announced in June. Five major partners, including PayPal, MasterCard and Visa, withdrew their support this month due to the business and regulatory challenges.