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.
David Marcus image via CoinDesk Archives
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.