While in the US, the authorities have not yet decided how they relate to the future Facebook cryptocurrency, the two largest economies in Asia have already decided. Libra will not pass.
Bengal tiger does not feel comfortable
The world recovers after the announcement of Libra. And it turns out, that not everyone is happy about plans of Mark Zuckerberg. In particular, they are not welcome in the largest countries of the world – India and China. What this may mean for the project is easy to understand if you remember that China is the second economy of the world. And India occupies the third place in the ranking of GDP at purchasing power parity.
If there were no special illusions about China, then India is an unexpected adversary. A lot of people from India work in Palo Alto, Mark Zuckerberg specially invited Indian Prime Minister Narendra Modi to his headquarters for friendly chat.
After that, it was India that was planned as a test area for the launch of Libra. This is not surprising – Facebook’s popularity in India is great, as is WhatsApp.
Now Libra loses one of the largest markets. Zuckerberg promised that it will reach the population deprived of access to banking services. India has just 11% of this population, according to the World Bank. But Economic Affairs Secretary Subhash Garg spoke out categorically:
– Design of the Facebook currency has not been fully explained. But whatever it is, it would be a private cryptocurrency and that’s not something we have been comfortable with.
India, where IT is developing at a faster pace, is very tough on cryptocurrencies. Last year, the central bank (Reserve Bank of India) banned all financial institutions under its control from providing services to a crypto-business. This immediately destroyed all Indian cryptoexchanges. Now a bill is being considered, according to which 10-year imprisonment is provided for mining, buying, selling and storing of cryptocurrencies.
As for the second economy of the world, Facebook applications are already banned in China. But this is not enough. China fears that Libra will replace the dollar in international finance, in which the People’s Bank of China keeps its reserves. This will allow the US to conduct business with China even more confidently, and Chinese financial power will suffer significantly. China’s “trump card” in Trump – Xi trade wars will be lost. Director of the People’s Bank of China research bureau Wang Xin said on the pages of the South China Morning Post:
– If the digital currency is closely associated with the U.S. dollar, it could create a scenario under which sovereign currencies would coexist with U.S. dollar-centric digital currencies. But there would be in essence one boss, that is the U.S. dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.
China’s response will be symmetrical as always. China already has its own Internet and all the most important Internet services. Now there will be its own state cryptocurrency. According to Wang Xin, “The Chinese government is launching a research initiative for digital finance made up of several prestigious universities in the country, including the Beijing University, Renmin University, Zhejiang University, and Shanghai Jiao Tong University”.
And Libra and Facebook are losing another 1.4 billion potential users. Together with India it is 2.7 billion.
