Libra Must Comply with Cross-Border Transaction Rules or Will Be Banned

According to Reuters, a spokesman for the State Administration of Foreign Currencies in China (SAFE) Sun Tianqi, addressed the summit in Shanghai, calling on governments of emerging market countries to consider limiting the spread of Libra. TIANQI noted that the ability of stablecoin to jeopardize state control over capital, as well as to produce illegal and unregulated cross-border transfers, is of particular concern.

«Financial technology can promote the opening up, innovation and development of a country’s financial market,» said Sun TIANQI, «but it could also bring a lot of illegal cross-border financial activities. This should be a matter of great concern to all countries, especially emerging markets.».

This comment fits into a series of public statements by other Chinese regulatory authorities regarding the Facebook initiative, which has caused a lot of controversies. Back in July, the former head of the People’s Bank of China Zhou Xiaochuan said that Libra poses a visible threat to payment systems and national currencies.

China's concern is that the yuan could be supplanted by cryptocurrencies of foreign origin in domestic operations. This significantly limits the ability of the state to control capital and foreign currency. At the same time, the People’s Bank of China intentionally puts pressure on the yuan in order to stimulate exports, weakening it against major reserve currencies.

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