Facebook's Libra Project

Published on by Cointele | Published on

The irony of this stance is apparently lost on both men, as neither France nor Germany have issued their own currency since 1999.Although the Facebook subsidiary Calibra - which was setup to facilitate Libra - is based in Switzerland, Facebook may have been expecting a more favorable reception in the United States as a heavyweight of Silicon Valley.

China didn't get the memo, and its response to Libra can be characterized as "Move faster and strike while the iron is hot." Shortly after Libra was announced in July, China announced its own Digital Currency Electronic Payment system, or DCEP, that it had been researching for five years.

Further updates on the project have made no attempt to hide the scale of China's ambition.

Speaking at the inaugural Bund Financial Summit in Shanghai in October, Huang Qifan, the vice chairman of the China Centre for International Economic Exchanges, indicated that one of the aims of the DCEP is to replace SWIFT and CHIPS - two networks that form a large part of the international payments system.

Perhaps China's politburo, remembering this statement, was keen to turn it on its head by revealing the existence of its DCEP while watching U.S. regulators threaten to tie Libra up with red tape.

Alipay is the largest payment processor in the world - the Chinese tech giant has been involved in payment processing in China for over a decade.

Along with the WeChat messaging app, Alipay accounts for 92% of China's mobile payments.

According to a 2017 report by the Brookings Institute, this system has less friction than the "Swipe card" system that dominates payments in the U.S. China's rapid uptake of mobile payments means they likely see Europe and the U.S., where signing for credit card payments and writing checks are still commonplace, as being well behind the curve.

Adoption in China does not mean that DCEP will become the dominant global payment rail overnight, but thanks to Alipay and WeChat, China has the world's leading mobile payment firms by transaction volume, and this infrastructure already serves Chinese nationals when traveling abroad, allowing for digital yuan to be used in commerce across the globe.

China will likely maintain exclusivity to edit and control access to the DCEP, which it could - using consistent language here - use to "Wage financial war" by using it in the same way the U.S. has done with the existing payments systems.

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