Cryptocurrency Not To Be Considered 'Legal Tender'; Centre To Treat It Like Stocks & Bonds
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Legal Tender? The Regulation of Cryptocurrencies
Cryptocurrencies will never become legal tender
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Demystifying Crypto: Digital Assets and the Role of Government
Cryptocurrencies not recognised as legal tender in Malaysia, says deputy minister
Useful assets:Although digital assets are not recognised as legal tender, Yamani added
it still has many different usage including as a class asset that can
be invested in
Cryptocurrencies are still not recognised as legal tender in Malaysia as they do not exhibit characteristics of universal money, says Deputy Finance Minister II Yamani Hafez Musa.
Yamani said cryptocurrencies, also known as digital assets, are also not a payment instrument that is regulated by Bank Negara. `
“Digital assets such as bitcoin and Ethereum are not suitable to be used as a payment instrument as these assets do not exhibit characteristics of money. `
“In general, digital assets are not a store of value and a good medium of exchange. `
“This is due to the state of digital assets which is exposed to volatility as a result of speculative investments,” he said when replying to a question raised by Nurul Izzah Anwar (PH - Permatang Pauh) in Dewan Rakyat on Thursday (March 3). `
Nurul Izzah had asked about the government’s role in monitoring and regulating currency as well as cryptocurrency assets. `
She also asked if the government had any plans to create digital currency taking into account Bank Negara’s involvement in Project Dunbar for international money transfers using blockchain technology. `
In explaining the volatility of cryptocurrency, Yamani said bitcoin hit a peak of US$65,000 (RM272,382.50) in April 2021 but quickly saw a decline of 50% the following week. `
He also said cryptocurrency is exposed to the risk of theft in which statistics from 2011 to 2021 showed that digital assets worth US$12bil (RM50.29bil) have been stolen through cyberattacks and hacking. `
He added that bitcoin is also only able to process 10 transactions per second compared to 65,000 transactions per second on current payment systems such as Visa. `
“Also, what is important is the huge impact on the environment because the electrical power that is used to process one bitcoin transaction can process 1.2 milliob visa transactions. `
In 2020, the bitcoin network used 132 terra-watts per hour which is equivalent to the entire electricity consumption of Argentina,” he said. ` Yamani added that currently, Bank Negara has also not decided to issue a central bank digital currency (CBDC) as the country’s domestic payment systems including the Real-time Retail Payments Platform continues to operate safely and efficiently to support Malaysia’s economic needs and allows real-time digital payments. `
“Additionally, the monetary policy tools and existing finances also remain effective in maintaining monetary stability and the country’s finances,” he said. `
Although digital assets are not recognised as legal tender, Yamani added it still has many different usage including as a class asset that can be invested in. `
As such, he said the Securities Commission (SC) as the market regulator has set digital assets as a security under the law and is responsible to regulate its trading activities.-
China's Bitcoin trading has plunged to 10 percent of global share from 90 percent, and the country has effectively curbed the speculation of crypto currency trading as part of an effortto fend off domesticfinancial risks and restore financial order, the central bank said on Thursday.
India and China come down hard due to concerns of financial market stability, illegal fundraising
N THE latest twist involving the world of cryptocurrencies, India’s government plans to impose a massive ban on the asset class.
Reports have indicated that the Indian government plans to pass a bill that would ban just about every activity involving cryptocurrencies, including the possession, issuance, mining, trading and the transferring of crypto-assets.
Once passed, this would make it one of the world’s strictest policies on cryptocurrencies. Government officials have said that the move is because they believe cryptocurrencies threaten the stability of financial markets, tend to fund unlawful activities and even resemble ponzi schemes.
The move by the Indian government falls in line with the school of thought that cryptocurrencies could increasingly suffer bans by governments around the world.
In India’s case, the move comes after an earlier ban two years ago. But last year, the courts in India overturned the decision, citing the ban as “disproportionate” after cryptocurrency exchanges filed a lawsuit against the central bank’s ban.
The strong stance against cryptocurrencies has also been shown by China’s government. More than three years ago, China was the first country to ban initial coin offerings (ICOs), calling it “illegal fundraising”.
Since then, the Chinese government has accelerated efforts to clamp down all businesses involved in cryptocurrency operations, including bitcoin miners.
China’s government says its stance is based on investor protection, money laundering concerns and the unnecessary consumption of energy due to crypto mining activities.
Last month alone, there were plans to ban new cryptocurrency mining projects and shut down existing ones in China’s Inner Mongolia region.
As one financial analyst puts it, “the problem with cryptocurrencies is that while it thrives to work in an unregulated world, it is bound to come under the scrutiny and regulation of governments, which are mostly afraid of its misuse and potential negative impact to financial markets. Perhaps somewhere in the future, a balance will be struck but that is anyone’s guess”.
While governments have a tendency to ban cryptocurrencies, many are embracing blockchain technology with the intention of issuing state-backed digital currencies.
This is essentially an electronic version of notes or coins which would replace physical cash entirely and dubbed central bank digital currencies or CBDC.
China is one of the leading countries for this and has already passed a law to legalise its own official digital currency. Similarly, India is an example of another country that is considering having its own digital currency. Interestingly, India’s move to pass the bill to ban cryptocurrencies comes soon after the mother of all cryptos, namely, bitcoin has hit its all-time high past US$60,000 (RM246,449) for the first time earlier this week.
The world’s biggest currency rally was driven by speculative demand, increased adoption by firms and institutional investors that see bitcoin as a store of value. Last month, Tesla bought over a billion dollars worth of bitcoins.
The electric car maker said it plans to accept the digital coin as payment for its products. Mastercard has also said it would also soon accept bitcoin as a form of payment.
Asset manager BlackRock and payment companies Paypal and Square have also recently backed cryptocurrencies.
Back home, the question remains whether the government, central bank or the Securities Commission (SC) would take a stronger stance against cryptocurrencies.
Malaysia’s regulators have held the view that digital assets are not legal tender and have warned investors to be cautious when dealing with cryptocurrencies.
SC chairman Datuk Syed Zaid Albar tells StarBizWeek that “investors must understand that unregulated, offshore investments are not protected under Malaysian securities law”.
“The SC has put in place a regulatory framework for such new emerging investment channels to provide certainty to issuers and investors who are keen to explore these new instruments.
“For example, our regulatory framework has tried to address issues such as putting investors’ money in trust accounts, accurate disclosures, cooling-off periods and conflict of interest situations are also regulated, ” Syed Zaid explains.
The country’s central bank, Bank Negara, also echoes a similar view, explaining that digital assets lack the characteristics of money and suffer from several limitations such as price volatility and risks of cyber threats.
“Digital asset activities are also subject to anti-money laundering and counter-terrorism financing regulations administered by the respective authorities, ” the central bank reported in its annual report in 2019.
Malaysia is also one of the countries studying the feasibility of issuing its own digital currency. “The bank is no exception, and we continue to engage closely in discussions surrounding CBDC with other central banks, ” it said.
More collaborations among central banks around the world are taking place to study the impact of a digital currency for financial stability and the monetary policy of a country.
Blockchain
is perhaps best known for underpinning the operation of
cryptocurrencies such as bitcoin, which Beijing may seek to replicate.PHOTO: REUTERS
One example of the potential application of
blockchain technology is a newly launched app by the Communist Party
that asks members to explain why they joined and what party loyalty
means to them. (Photo: AFP/Greg Baker)
BEIJING: China has launched an ambitious effort to challenge the US dominance in blockchain technology, which it could use for everything from issuing digital money, to streamlining a raft of government services and tracking Communist Party loyalty.
The technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees blockchain as an integral part of the country's plan to become a high-tech superpower.
Beijing is the latest in a handful of countries to have adopted a law strictly governing the encryption of data - particularly blockchain technology, which allows the storage and direct exchange of data without going through an intermediary.
Reputedly unfalsifiable, blockchain is a database shared across a network of computers. Once a record has been added to the chain it is almost impossible to change.
It is perhaps best known for underpinning the operation of cryptocurrencies such as bitcoin - which Beijing may seek to replicate as it pushes ahead with its plans for a world-leading government-run digital currency.
Blockchain technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees it as an integral part of the country's plan to become a high-tech superpower. (Photo: AFP/Andrew Caballero-Reynolds)
Although the new law for blockchain "is still rather vague", the country is clearly one of the most active in terms of regulation, Stanislas Pogorzelski, editor of specialist site Cryptonaute.fr, told AFP.
"China has understood very well that to stay a superpower, you have to be at the forefront of new technologies," said Pogorzelski.
Blockchain is set to play a key role in many sectors in the future, including digital finance, internet of things, artificial intelligence and 5G.
LESS HUMAN INTERVENTION
Bitcoin(FX:BTC/USD)Stock market insights from social media
Updated https://sentifi.com/currencies/bitcoin
It could also serve to make China's vast bureaucratic system more efficient.
The official Xinhua news agency said a blockchain-based system had been used for the first time to automatically generate and file an enforcement case in Chinese court against a party who failed to pay damages in a mediation agreement.
With less human intervention, such systems could make judicial enforcement in China "more intelligent and transparent," the agency said.
Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology.
"Blockchain should play a bigger role in strengthening Chinese power in cyberspace, developing the digital economy and promoting socio-economic development," Xi said.
"The general sentiment of Xi's comments was simple," said Anthony Pompliano, who writes a daily cryptocurrency newsletter.
"Blockchain technology is really important for the future and China plans to be the global leader," Pompliano added.
LOYALTY TEST
According to analyst Kai von Carnap of the Mercator Institute for Chinese Studies, blockchain-backed tools have potential applications that go well beyond improving administrative efficiency in China.
"More interesting will be those targeting party discipline, internal stability and ideological loyalty," Von Carnap told AFP.
Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology. (Photo: AFP/Hector Retamal)
One example is a newly launched app by the Communist Party that asks members to explain why they joined and what party loyalty means to them.
Blockchain technology is then used to store their responses on a permanent, widely distributed ledger - recording their thoughts in cyberspace forever.
"NOT A FAN"
As China trumpets its push for more blockchain technology, it is hoping to outpace trade-war rival the United States, whose President Donald Trump tweeted his disdain for cryptocurrencies in July.
"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," he wrote.
The contrast between the world's two biggest economies is "striking", according to Pompliano, who says "bitcoin, blockchain technology, and digital assets are not a priority for America".
Facebook chief executive Mark Zuckerberg had to defend his plans to launch a digital coin called Libra to the US Congress in October, after it faced a torrent of criticism from all sides - including governments who see it as a threat to their monetary sovereignty.
"I don't think Libra will succeed," Huang Qifan, vice director of the CCIEE, an economic think-tank that advises Beijing, said this week in remarks widely reported by state media.
"It is better ... to have sovereign digital currencies issued by a government or a central bank," he said.
Last year China released a damning report on existing digital currencies, saying they were "increasingly used as a tool in criminal activities."
But while Beijing banned cryptocurrencies two years ago, it is fast-tracking preparations for its own state-run virtual currency, which is supposed to facilitate transactions and reduce costs.
The anonymity of cryptocurrencies allows users to buy and sell freely without leaving a digital trail - but China's mooted e-cash system will be tightly regulated, experts say, and run by the People's Bank of China.
Blockchain endorsement: Xi said China will
increase investment in blockchain technology after chairing a study
session last week on developing the industry, state-owned Xinhua
reported.— AP
https://youtu.be/hfNcct7ZfbE
https://youtu.be/KoDD2Yk0bjE
Shenzhen tech index surges 5.3%, the most in eight months
Investors urge companies to develop blockchain businesses
BEIJING: Chinese investors snapped up every blockchain-related stock in sight after President Xi Jinping said Beijing wants to speed up development of the technology.
The gains were widespread yesterday, with Insigma Technology Co and Sinodata Co among more than 60 tech shares surging by the daily limit in Shanghai and Shenzhen.
The excitement coincided with a 26% rally in Bitcoin, and also boosted stocks with more tenuous connections to blockchain, like baby-food producer Beingmate Co and selfie-app developer Meitu Inc.
Xi said China will increase investment in blockchain technology after chairing a study session last week on developing the industry, state-owned Xinhua reported late last Friday.
The market reaction shows how far an endorsement from Xi can go in China, where high-level officials yesterday began their first major policy meeting since early 2018.
“Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype, ” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co. “It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”
The Shenzhen Information Technology Index closed 5.3% higher yesterday, its biggest advance in eight months.
Hundsun Technologies Inc, Easysight Supply Chain Management Co, YGSOFT Inc and dozens more companies with officially registered blockchain businesses rose by the 10% limit.
In Hong Kong, traders singled out Meitu due to its plans for an encrypted user-identification system.
The shares surged as much as 30%. Pantronics Holdings Ltd - which earlier this month said it will change its name to “Huobi Technology”, a reference to a digital currency exchange - rallied as much as 67%.
American depositary receipts of Chinese blockchain companies also surged last Friday.
Investors pressured other firms to jump on the blockchain hype, using an online Q&A platform to submit thousands of questions on their plans to use the technology.
“Please proactively make expansion plans in blockchain to jump on state policies - doing so would be the best reward to investors, ” urged one shareholder of development-store operator Hunan Friendship & Apollo Commercial Co. — Bloomberg
Harking after a home: Officials have
acknowledged that the lack of affordable housing is one of the issues
that sparked the unrest in Hong Kong, which has been going on for
months. — AFP
Owning a house is the standard ambition of any individual, however, getting there is increasingly becoming not only a local, but global struggle.
THERE’S a lesson to be learnt from the protests in Hong Kong – politics is about selling hope. So if the young people living in a depressing environment feel they have no future, then the alarm bells should ring loudly.
In the case of Hong Kong, the leaders – mostly technocrats and government officials – didn’t see it coming, or maybe they were just indifferent.
Many young people in Hong Kong feel they stand no chance of becoming a homeowner in their lifetime, and officials have acknow-ledged that the issue is one of the causes that sparked off the unrest.
The controversial Extradition Bill, which allows a Hong Kong resident to be sent to mainland China to face trial, was merely a catalyst. Those protesters couldn’t all possibly believe they’d fall on the wrong side of the law and face the consequences, could they?
Last week, former Hong Kong chief executive Leong Chun-ying was in Kuala Lumpur for appointments with businessmen, opinion leaders and officials, to update them on developments on the island.
I was among the lucky Malaysians picked to hear his thoughts and views on Hong Kong, while he, too, listened to our concerns during the two-hour closed-door meeting.
My co-host and meeting organiser, Datuk Seri Azman Ujang, and I both feel that of all the problems faced by any country in nation- building, none deserves greater priority than housing the people.
What expectation could be more basic than having a roof over our heads, and with it being a decent and affordable one at that? And when we talk about affordable, it should be truly attainable by the low-income people who form the bulk of the population in most countries.
Azman, the Bernama chairman, rightly outlined the consequences of the failure that stems from a lack of will in resolving the housing problem of the masses. And as he said, this could easily lead to people pouring into the streets protesting issues not even directly related to housing.
It’s a fact that many poor Hong Kong people live in a room less than 75sq ft, and millions live in deplorable conditions.
More recently, “nano” flats – tiny apartments less than 200sq ft – have fast become the norm in overcrowded Hong Kong.
According to a South China Morning Post report, the cost began at HK$2.85mil (RM1.52mil) for an apartment no bigger than an average Hong Kong car park space, but the lack of interest forced a rethink by the developer.
But what’s mind-boggling is that while there are plenty of poor people in Hong Kong, or many who feel poor, Hong Kong’s fiscal reserves stood at HK$1.16tril (RM620bil) as at the end of January.
In a report, Financial Services and the Treasury Bureau said there was a surplus of HK$86.8bil (RM46.2bil), bringing the cumulative year-to-date surplus up to HK$59bil (RM31bil).
All this wealth belongs to Hong Kong and not mainland China, so a lot can be done with that money for a population of just seven million people, especially low-cost housing!
In comparison, Malaysia’s official reserve assets amounted to US$102.03bil (RM425bil) as at end November 2018, while other foreign currency assets stood at US$51.6mil (RM215mil) for the same period, Bank Negara said. Malaysia has a population of 32 million.
It can’t be denied that Singapore has done well in housing its population, with over 90% of the seven million population reportedly living in homes of their own, and the home-ownership ratio is said to be the world’s highest.
The Singapore Housing Development Board (HDB) deserves global recognition for its feat in solving the housing problem of the people, especially the poor.
The middle-class and poor must be able to have a roof over their heads. That’s an essential human need. No country can have peace and stability if the poor are not able to own a home in their lifetime.
A prosperous and satisfied middle-class will lead to political stability. A huge middle class will also mean greater purchasing power, and this will lead to a better economy with spillover effects for everyone.
When there are angry citizens protesting everything from the escalating food prices to housing, then even the elite (including politicians and businessmen) will not feel safe. In South Africa, the rich live in houses with high walls and electric fences to protect themselves, but that’s not the best way to live. It’s living dangerously.
Malaysian politicians who still wield the race and religion card will realise that at some point, these will be “dead issues”.
With well-documented shrinking numbers, the Chinese and Indian population will no longer be the proverbial bogeymen in the future. Instead, it is class stratification that will be a matter of concern.
Last year, it was reported that the gap in income between the rich, middle class and poor in Malaysia had widened since 2008, according to a study by Khazanah Research Institute (KRI).
In its “The State of Households 2018” report, the research outfit of sovereign wealth fund Khazanah Nasional Bhd noted that the gap in the real average income between the top 20% households (T20) and the middle 40% (M40) and bottom 40% (B40) households had almost doubled, compared to two decades ago.
The report, titled Different Realities, pointed out that while previous economic crises, in 1987 and the 1997/98 Asian Financial Crisis, saw a reduction in the income gap between the T20 and B40/M40, post-2008/09 Global Financial Crisis (GFC), those disparities had not reduced.
But the Gini coefficient, which measures income inequality in the country, had declined from 0.513 in 1970 to 0.399 in 2016, denoting improvement in income inequality in Malaysia over the past 46 years.
Explaining the phenomenon, Allen Ng, who is the lead author of the KRI report, said income of the T20 households had continued to grow, albeit at a slower pace than that of the M40 and B40 since 2010.
“However, because they (the T20) started at a higher base, the income gap between the T20 and M40/B40 had continued to grow despite the fact that the relative (income growth) is actually narrowing post-GFC, ” Ng explained at a press conference after the launch of the report yesterday.
In his bestselling book The Colour Of Inequality: Ethnicity, Class, Income And Wealth In Malaysia (2014), economist Dr Muhammed Abdul Khalid wrote that “the future does not look rosy for Malaysia; the current policies are encouraging wealth disparity between rich and poor, and between ethnicities.
“Unless bold and drastic actions are taken urgently, a harmonious future for Malaysia is uncertain. There must be an urgency to give every Malaysian economic security, a better and sustainable future.”
Muhammed, the managing director of the research and consulting firm DM Analytics Malaysia, said last year that contrary to popular belief, most Chinese (70%) are wage-earners, as are most Malays (72%). In fact, the poverty gap between races has dropped compared to 40 years ago, though the disparity remains.
And what about Malaysia? We have a disastrous, if not scandalous, record, particularly the pathetic business activities, dealings and performance of the 1Malaysia People’s Housing Programme’s (PR1MA) set up to build affordable homes.
More than RM8bil has gone up in smoke because PR1MA’s management failed to meet its targets, despite all the assistance and facilities accorded to their projects by the previous federal government and most state governments.
PR1MA reportedly built only 11,000 homes, compared with its target of half a million residential units to be delivered by the end of 2018. That’s less than 5% of the original plan.
PR1MA Malaysia was set up to plan, develop, construct and maintain high-quality housing with lifestyle concepts for middle-income households in key urban centres. Its homes are priced between RM100,000 and RM400,000.
PR1MA is open to all Malaysians with a monthly household income of RM2,500 to RM15,000.
A total of 1.42 million people registered for PR1MA, a promise of one million homes by 2020, but only 16,682 units, or 1.6%, of the target, were completed between 2013 and 2018, costing the government billions in public funds.
Poor management, exorbitant land acquisition costs and unsuitable sites have turned the people’s housing project into a major financial flop. PR1MA’s failure, which could cost the new government billions, is apparently already saddled with ballooning debts, rendering the loss-making company untenable.
It’s the responsibility of the government to build affordable homes – not the private developers. Private developers, especially those who helm public listed companies, have profits and dividends to answer for to shareholders. They are in the business of making money, and with the expensive land bank they have acquired, they need to build expensive homes, too.
Even if there are requirements with the obligated mixed homes for social housing needs, it still won’t resolve the problems.
Our politicians shouldn’t pass their responsibilities to them. They just need to have qualified and competent professionals with integrity to run a set-up like HDB. Obviously, the people who ran PR1MA didn’t do their jobs. We can help Malaysians own homes, or at least rent them at affordable rates, if we’re truly committed. The question is, are we?
As for Hong Kong, there is another lesson the young protesters need to learn: a full democracy doesn’t guarantee you a home and a decent job. Just ask the homeless in the United States and Britain.
-- China's central bank on the brink of launching a digital currency. How will this revolutionize the monetary landscape in China and abroad?
-- and, we meet a scholar whose calling revolves around friendly China-US ties. How can people on both sides maintain the relationship.
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From 'Made in China' to 'Created in China'从中国制造到中国智造
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Made in China" used to be a synonym for cheap products, but all that has changed. China has made huge progress in innovation and technology. From the Sunway TaihuLight supercomputer, the fastest in the world, and the 500-meter-wide radio telescope in southwest China's Guizhou Province, to the development of lithium battery and 3D-printed blood vessels made from stem cells and renewable energy technologies, Chinese innovations are making a name for themselves.
CGTN explains China's huge transformation from the world's factory to an innovation leader.
CGTN's special program "New China" gives you an in-depth look at China 70 years on. Our crew is on a 12-day journey around China's southwestern, southeastern and northeastern regions. Don't miss it. #PanoramicChina #70YearsThriving
China's central bank speeds up digital currency drive
Private-sector players likely to participate in project
Photo: VCG
With internet technologies advancing and cryptocurrencies flourishing amid a broad digital transformation, individual countries are starting to issue legal tender in digital form, and the People's Bank of China (PBC), the country's central bank, is also accelerating its pace in this area.
As of Sunday, the PBC had applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, according to a report by the Economic Information Daily on Monday.
The PBC said it will speed up the development of legal digital currency on Friday.
Wang Xin, director of the PBC Research Bureau, said in July that the authority is organizing market-oriented institutions to jointly research and develop a central bank digital currency and the program has been approved by the State Council, China's Cabinet.
"China is beefing up efforts in digital currency innovation, a trend driven by emerging technologies that is spreading worldwide," said Huang Zhen, a professor at the Central University of Finance and Economics.
Rather than letting cryptocurrencies challenge the position of sovereign currencies, it is wiser for countries to roll out their own digital currencies, Huang told the Global Times on Monday.
Chinese authorities ordered a ban on initial coin offerings in 2017 and stopped direct bitcoin-yuan trading as the rapidly expanding market spawned concerns over financial risks.
The PBC, one of the earliest central banks in the world to start the process of digital currency innovation, launched its program in 2014 during the tenure of former governor Zhou Xiaochuan. In 2017, the PBC established a research institution for the digital currency.
"China is among the leading countries in terms of its research into a government-backed currency," said Huang.
Favorable conditions
The basic conditions favorable for China's implementation of a digital currency include comprehensive and fast networks, broad digitalization in the financial sector, and advanced financial technologies - particularly blockchain, a digital, public ledger that records online transactions, according to Huang.
In recent years, Chinese internet companies have made huge achievements in the mobile payment and e-commerce sectors, helping create a digital economy of more than 30 trillion yuan ($4.36 trillion), according to media reports.
In June, US social media giant Facebook released an official white paper for its cryptocurrency project Libra, a blockchain-powered stablecoin expected to arrive in 2020.
The move stepped up the global race for digital currencies, with China's central bank paying close attention.
The central bank is closely working with market participants on creating a central bank digital currency, PBC official Wang said.
"China's private market players have accumulated some experience in the digital currency sector. Their participation in the government's work will effectively help promote the project," Cao Yin, an expert in the blockchain sector, told the Global Times on Monday.
It is likely that the sovereign digital currency will be issued within two or three years at the soonest, although the authority tends to take a prudent attitude, Cao said.
Once it is broadly implemented, the new currency will have a big impact on Alibaba's Alipay and Tencent's WeChat Pay, the two dominant mobile digital payment tools in China, as the PBC's digital currency is featured by decentralization, unlike the former two.
Challenges ahead
There are still some bumps on the road to promoting the digital currency.
"For this new kind of currency, its nature actually poses challenges to existing policies in such aspects as foreign exchange control, so it takes time to balance benefits with potential risks," said Cao.
A flexible and open mechanism is needed by the PBC to attract more talent, he added.
Digital currencies can help strengthen regulation as transaction data can be tracked and analyzed, including illegal money laundering, according to Huang. But laws and rules should be formulated in a timely fashion to protect individual information. "Safety is the biggest issue," he added.
"Use of the digital currency to better serve the real economy also requires policy guidance," said Huang.
Newspaper headline: PBC accelerates digital currency drive.
in China to launch a national digitalcurrency, following the central government's plan to work...
Source: Global Times | Author: Li Xuanmin and Shen Weiduo in Shenzhen | Column: Economy
: 3pxFile photo: ICpResearch into a national digitalcurrency, as mentioned in a central government...
Source: Global Times | Author: Zhang Hongpei | Column: Economy
Cryptocurrency and Facebook logo are seen together in this photo. Photo: IC
https://youtu.be/eAPLA4oy7Ks
Experts raise concerns over privacy and regulation
Facebook unveiled plans Tuesday for a new global cryptocurrency called Libra, pledging to deliver stable virtual money that lives on smartphones and could bring over a billion "unbanked" people into the financial system.
The Libra coin plan, backed by financial and nonprofit partners, represents an ambitious new initiative for the world's biggest social network with the potential to bring crypto-money out of the shadows and into the mainstream.
Facebook and some two dozen partners released a prototype of Libra as an open source code for developers interested in weaving it into apps, services or businesses ahead of a rollout as global digital money next year.
The nonprofit Libra Association based in Geneva will oversee the blockchain-based coin, maintaining a real-world asset reserve to keep its value stable.
The Libra Association's Dante Disparte said it could offer online commerce and financial services at minimal cost to more than a billion "unbanked" people - adults without bank accounts or those who use services outside the banking system such as payday loans to make ends meet.
"We believe if you give people access to money and opportunity at the lowest cost, the way the internet itself did in the past with information, you can create a lot more stability than we have had up until now," Disparte, head of policy and communications, told AFP.
Facebook will be just one voice among many in the association, but is separately building a digital wallet called Calibra.
"We view this as a complement to Facebook's mission to connect people wherever they are; that includes allowing them to exchange value," Calibra vice president of operations Tomer Barel told AFP.
"Many people who use Facebook are in countries where there are barriers to banking or credit."
But the move raised questions about how such a new money would be regulated, with one lawmaker calling for a pause on Libra.
"Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues," said Maxine Waters, chair of the financial services committee in the US House of Representatives.
Meanwhile French Finance Minister Bruno le Maire said such digital money could never replace sovereign currencies.
"The aspect of sovereignty must stay in the hands of states and not private companies which respond to private interests," Le Maire told Europe 1 radio.
Bank of England Governor Mark Carney said Facebook's new currency would have to withstand scrutiny of its operational resilience and not allow itself to be used for money laundering or terror financing.
ING economists Teunis Brosens and Carlo Cocuzzo said in a research note it was not clear what Libra was or how it might be overseen while US Senator Sherrod Brown, a Democrat and banking committee member, voiced concerns over Facebook's checkered record on protecting users' privacy.
Backed by real cash
Libra Association debuted with 28 members including Mastercard, Visa, Stripe, Kiva, PayPal, Lyft, Uber and Women's World Banking.
Calibra is being built into Facebook's Messenger and WhatsApp with a goal of letting users send Libra as easily as they might fire off a text message.
Libra learned from the many other cryptocurrencies that have preceded it such as bitcoin and is designed to avoid the roller-coaster valuations that have attracted speculation and caused ruin.
Real-world currency will go into a reserve backing the digital money, the value of which will mirror stable currencies such as the US dollar and the euro, according to its creators.
"It is backed by a reserve of assets that ensures utility and low volatility," Barel said.
The Libra Association will be the only entity able to "mint or burn" the digital currency, maintaining supply in tune with demand and assets in reserve, according to Barel.
"It is not about trusting Facebook, it is effectively trust in the association's founding organizations that this is independent and democratic," Disparte said.
New directions
The launch comes with Facebook seeking to move past a series of lapses on privacy and data protection that have tarnished its image and sparked scrutiny from regulators around the world.
Chief executive Mark Zuckerberg has promised a new direction for Facebook built around smaller groups, private messaging and payments.
The new Calibra digital wallet promises eventually to give Facebook opportunities to build financial services into its offerings, offer to expand its own commerce and let more small businesses buy ads on the social network.
"We certainly see long-term value for Facebook," Barel said.
Facebook said it would not make any money through Libra or Calibra, but rather was seeking to "drive adoption and scale" before exploring ways to monetize the new system.
Financial information at Calibra will be kept strictly separate from social data on Facebook and won't be used to target ads, Calibra vice president of product Kevin Weil told AFP.
Libra will be a regulated currency, subject to local laws in markets regarding fraud, guarding against money laundering and more, Weil said.
'Watershed' moment?
According to Facebook and its partners, local currencies and Libra may be swapped at currency exchange houses or other businesses.
And the ubiquity of smartphones means digital wallets for Libra could make banking and credit card services and e-commerce available in places where they don't now exist.
Analyst and cryptocurrency investor Lou Kerner said Facebook's move has the potential to open the door for cryptocurrency to a wider public.
"What Facebook is really good at, is making things really simple to use," Kerner told AFP.
"And that's what is super exciting for the crypto industry, is somebody comes along who understands user experience and has billions of users that they can roll this out to."
