After Facebook launched the Libra white paper and framework in June this year, it has aroused the attention of people from all walks of life around the world. Its influence has gone far beyond the field of digital currency and has become a continuous hot topic in the financial world.
Now Libra is being opposed by regulatory agencies in various countries, and the founding members have withdrawn in batches. When the Council has just been officially established and Libra is at a critical crossroads in its development, Facebook CEO Zuckerberg's hearing on Libra in Congress last night naturally became the focus of the world's attention.
After listening to the lengthy hearing, Uncle Kai believes that the core content can be condensed into one sentence:Xiao Zha reiterated Libra's vision of establishing an efficient and inclusive global financial system, and worked hard to dispel the doubts of congressional lawmakers.
For example, Libra needs to be approved by all regulatory agencies in the United States, especially in terms of anti-money laundering and anti-terrorist financing. Facebook will not participate in the launch of the Libra project until it has received regulatory approval. If Libra goes live without regulatory approval, Facebook will be forced out of the association. And it has been repeatedly emphasized that Facebook is only one of the members of the Libra Alliance. In the future, Libra will be led by the Alliance, so that Facebook and Libra can be properly separated to avoid affecting the progress because of the big tree.
There is not much new in these explanations, and they are similar to Xiao Zha’s written testimony released the day before the hearing.
The only shocking and puzzling thing is that when the US Congress discussed Libra, China was mentioned 21 times. Why does the Libra hearing in the US Congress get involved with China?
In fact, China has been implicated, and it has already been revealed in Xiao Zha's written testimony released in advance.
Due to the media's request for an interview, Uncle Kai carefully read Xiao Zha's written testimony. Uncle Kai pointed out in his comments in an interview (for details, see "Playing the Sino-US relationship card? Cutting the relationship with Libra? The boss sharply commented on Zuckerberg's hearing testimony"): Xiao Zha's written testimony is quite satisfactory, and it is predictable. The only exception is that China is mentioned somewhere in it.
"Zuckerberg's example of China's digital currency is a bit far-fetched.He mentioned China purely to take advantage of the bad relationship between the two countries to touch the US Congress and regulators, which is a technical question."
But things turned out to be more serious than expected. Xiao Zha was more than successful in touching the nerves of members of the US Congress, and China became a high-frequency topic at yesterday's hearing. Uncle Kai speaks with data, through the search and verification of the full text version of the hearing,China was mentioned 21 times in the speeches, Xiao Zha mentioned it 11 times, and members of Congress mentioned it 10 times. Among Xiao Zha’s 16 core views on Libra, one out of every four directly mentions China.
Xiao Zha’s core logic about China and Libra: Congress should support financial innovation. If Libra is not supported or even resolutely opposed, Libra will not be able to support the hegemony of the US dollar and cannot realize American values. At the same time, part of China's infrastructure is better than that of the United States. The Chinese central bank will use this advantage to replace Libra, and will soon implement a set of Chinese digital currency systems and standards around the world, seriously shaking the dollar's hegemony and the spread of American values.
Such logic is full of loopholes and cannot withstand scrutiny. Because although Libra and the digital currency of the People's Bank of China are collectively referred to as digital currency, there is a huge difference, and they are not equal competitive relationships, and there will be no direct conflict.
First, the nature of the two is different
Libra is a non-sovereign alliance digital currency, and the central bank plans to launch a sovereign national digital currency. One non-sovereign and one sovereign are fundamentally different in nature, and the meanings behind them are completely opposite. The reason why the launch of Libra is not going well is that the regulators are not at ease, and the fundamental reason is that it is a non-sovereign digital currency, and the central bank's digital currency does not need to consider the issue of regulatory release at all, because the central bank itself is the regulator.
Second, the two functions are different
As Xiao Zha has always reiterated at the hearing, "Libra is a transnational payment system that will not compete with the legal currency of sovereign countries"; China's central bank digital currency is legally equivalent to the national sovereign currency. In addition to payment, there are also Settlement, valuation, reserve and other functions that currency should have.
Xiao Zha kept saying to U.S. officials that Libra will not affect the U.S. dollar. Libra is only a payment system and will not compete with national sovereign currencies including the U.S. dollar. But why does it compete with the digital currency of the Central Bank of China? Clearly contradicting itself. According to Xiao Zha's repeated emphasis: Libra is only a payment tool, so it is reasonable for Libra's real competitors to be payment companies such as Alipay, WeChat Pay, Paypal, Visa, and Master that have withdrawn from the alliance.
Moreover, it is not only China that is conducting central bank digital currency research at the same time in the world, but also the European Union and Sweden. It is obviously ulterior motives to single out China
Third, the geographical scope of the two uses is different
Facebook cannot be accessed in China, and the Libra Alliance currently has no Chinese companies, and its planned reserve currency package does not include RMB, so it is foreseeable that even if Libra succeeds, there is a high probability that it will not cover mainland China; from the perspective of the People’s Bank of China, There is a high probability that Libra will not be allowed to be used in China. The central bank's digital currency will also be used in China like the renminbi, and the two will not interfere with each other.
As for what Xiao Zha said in Congress, "They (the Central Bank of China) can use it (the Central Bank of China's digital currency) as part of the 'One Belt, One Road' plan, using their economic and political influence to enable it to be used in Asia and Africa. "Not only does this lack common sense, but it's also alarmist.
After decades of accumulation, RMB internationalization has only taken a small step so far. Even if the central bank launches a digital currency, it must be widely used and popularized in China before it can take the first step towards internationalization. It would be too early to start demonizing the brewing central bank digital currency.
This reminded Uncle Kai that he used to invite female friends who didn’t exercise often to exercise together. They often had such worries: Will playing tennis make their arms thicker? Does running make your legs thicker? Uncle Kai looked at them so weak, with thin arms and legs, and thought to himself: xx is hypocritical, something only considered by professional athletes. (Of course, it doesn't rule out that they can't find a better reason to reject Uncle Kai.)
Finally, the time order of the two is not correct
Xiao Zha repeatedly emphasized at the hearing: "After Libra released the white paper, the People's Bank of China immediately (the original text used is immediately) started (the original text used kickoff) digital currency plan, and wanted to launch it before Libra as soon as possible." This is putting the cart before the horse.
The central bank established a dedicated digital currency research team in 2014 to conduct in-depth research on digital currency issuance and business operation framework, key technologies of digital currency, issuance and circulation environment, and legal issues faced. In January 2017, the central bank officially established a digital currency research institute in Shenzhen. The launch of the central bank's digital currency has been one of the central bank's focus in recent years.When the central bank began to study digital currency, Libra hadn't even appeared in the shadow.
The central bank’s acceleration of the digital currency launch process is more or less due to the factors that Libra has attracted global attention, but it is definitely not like “the central bank started to start because of the launch of Libra” as Xiao Zha said. This is obviously not in line with the facts.
Uncle Kai admires Xiao Zha and supports Libra, because he is impressed by Xiao Zha's personal charm as a leader in the global Internet industry, and is also deeply attracted by Libra's great vision.
But Uncle Kai disdains Xiao Zha's behavior:In order to achieve the goal of promoting Libra, they do not hesitate to play the Chinese card, the logic is chaotic, the facts are not distinguished, and even alarmist. At a time when Sino-US relations are at a low ebb and the US Congress is extremely unfriendly to China, such an operation is tantamount to throwing a lighted match into an oil barrel.
Actively introducing politics into business, this kind of unconventional operation itself is a double-edged sword. Xiao Zha also deliberately choseIn the most sensitive period and on the most sensitive occasion, introducing the most intricate international relations between China and the United States into the most complicated business plan so far, this wave of magical manipulation really made Uncle Kai amazed.
The consequences of this may be astonishingly lethal, and Xiao Zha will hurt others and himself if he doesn't do it well.
Is it possible that only the People's Bank of China can save Libra?This kind of problem, which should not have arisen in the first place, may actually become a reality now.Xiao Zha must be secretly cheering for the early launch of the central bank's digital currency by the People's Bank of China, which is really ironic.
In short, this hearing will make Uncle Kai very disappointed with Xiao Zha.
