(BlockBar) Zhou Xiaochuan, former governor of the China’s Central Bank: Libra predicts that a strong global currency will occur in the future. China should take active precautions towards it.
On July 9, Zhou Xiaochuan, former governor of the People’s Bank of China and President of the China Finance Society, commented on the recently popular Facebook encrypted currency Libra at the seminar on “Reform and Development of China’s Foreign Exchange Management”. He believed that there might be a more internationalized and globalized currency in the future, leading to the exchange relationship with major currencies. “This is not necessarily Libra, but according to the developing trend, there will be a lot of institutions and people trying to build a more globalized currency.”
Zhou Xiaochuan said that Libra has made at least two improvements on the basis of former encrypted currencies: first, it avoids large fluctuations in currency values and speculative elements; and second, it targets the demands on cross-border trade, especially for developing countries. Specifically, Libra’s first advance was to avoid the shortcomings of encrypted currencies rushing to speculate to make money. The second progress is to improve cross-border payments.
Zhou Xiaochuan believes that although there are progresses, Libra also has problems, such as anti-money laundering. In addition, how do Libra’s reserve assets be managed? To what institution? These problems remain questioned. “Whether it will succeed or not is not known, but this idea will have an impact on the existing system.” There may also be new global currencies that will circulate and be used globally in the future. It may not be Libra, and Libra may be replaced by a better, stricter and more efficient global currency.
Zhou Xiaochuan pointed out that in fact, Libra reflects the replacing and eroding weak currencies with strong currencies. He said the idea of global currency came up, which will shock the traditional businesses and payment systems. Libra’s attempt to target a basket of currencies represents a possible trend towards a global currency in the future. “In the process of convergence and integration of RMB and foreign currencies, we need to consider the pressure of this trend on us.”
Zhou Xiaochuan emphasized that maintaining a strong currency position may put us in a favorable position in the whole process of internationalization and globalization of the RMB in the future. Looking back on the history of China’s development, after the global financial crisis in 2008, one of the most important reasons why China has been able to narrow the gap with the United States is that “our financial system is relatively sound”. Therefore, Zhou Xiaochuan believes that China should take precautions and do policy research well in advance.
Key words: Zhou Xiaochuan, libre; encrypted currency, globalization
Weekend is the most representative female writer in the blockchain industry. She is known for her keen news capture ability and is good at English writing of blockchain news in the Chinese region.