The decision came as Libra could purportedly pose a risk to the country’s financial system. The People’s Bank of China (PBoC) research bureau suggested that creating a digital currency is due to the unclear role of the US dollar once Libra is issued: although sovereign currencies would coexist with US dollar-centric digital currencies, there would be in essence one boss – the US dollar and the US. If this happens, PBoC believes it would bring a series of economic, financial, and international political consequences.
PBoC purportedly received approval from the State Council, the chief Chinese administrative authority, in order to begin work with other market participants and institutions on a central bank digital currency.
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