Facebook Warns US Regulators Over Digital Currency Competition With China
Recently, David Marcus, the executive leading Facebook’s Libra initiative, told Bloomberg News that the United States risks ceding ground to China in the global battle for digital payments primacy if regulators delay the implementation of Facebook’s blockchain-backed Libra.
Following Facebook’s announcement regarding Libra in June 2019, the People’s Bank of China began the development of their own digital version of the Chinese yuan, in an effort to increase the security of financial transactions and reduce the role of cash in the Chinese money supply. Meanwhile, US regulators are still debating and trying to figure out a way to regulate Facebook’s newly proposed digital coin.
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Echoing similar sentiments to Facebook CEO Mark Zuckerberg’s concerns raised to congress in April 2018, when Zuckerberg feared that a break up of US tech firms would give an advantage in global competitiveness to China, David Marcus commented, “The future in five years, if we don’t have a good answer, is basically China re-wiring.” He says the world could be equipped “with a digital renminbi running on their controlled blockchain.” He continued to explain the risk of, “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.”
This struggle for supremacy in digital currency represents another area of competition between the US and China to dominate the next generation of frontier technologies. However, some critics argue that Facebook is using competition with China as a proxy to dodge anti-trust regulation and strengthen their position as a dominant player in the western technology landscape.