In China, the central bank will debut a state-backed cryptocurrency that initially will be issued to seven institutions in that country, Forbesreported this week.
The news comes from Paul Schulte, who was head of financial strategy for China Construction Bank. He told the financial publication the firms include the Industrial and Commercial Bank of China, the Bank of China, Alibaba, Tencent, Union Pay and others. Those companies will be tasked with distributing the crypto to citizens and others who want to transact using the digital coins.
A separate source told the publication that an eighth firm, unidentified, might also be tapped to receive the cryptocurrency, which could debut in time for China’s Nov. 11 Singles Day shopping holiday.
“China is barreling forward on reforms and rolling out the cryptocurrency,” Schulte said. “It will be the first central bank to do so.”
The plan, as of this writing, has not yet been confirmed. But it dovetails with comments that had been made by Mu Changchun, who serves as deputy director of the Paying Division of the People’s Bank of China. Last month, Forbes reported, Mu said at an industry forum that the bank would create the crypto, while other entities would distribute it. The two-tiered system is designed to help “curb” public demand; it should also stimulate competition.
“This dual delivery system is suitable for our national conditions,” said Mu. “It can not only use existing resources to mobilize the enthusiasm of commercial banks but also smoothly improve the acceptance of the digital currency.”
Crypto in Brazil
In Brazil, as many as 1.4 million point-of-sale (POS) devices will be able to support cryptocurrencies.
As reported by Cointelegraph Brazil, users will be able to make payments using cryptocurrencies through Cielo POS devices. The payments will be facilitated by QR codes, according to reports, with devices used to scan the codes and make payments.
The news outlet also reported that customers will need to hold accounts with Cielo network partners that include Criptohub or Uzzo. Cielo’s devices operate across 5,500 municipalities in Brazil.
In other news tied to Brazil, the crypto startup Pundi X has struck a pact to distribute the cryptocurrency POS device known as XPOS across Traki, a department store with locations across Venezuela.
Debate Continues Over Facebook’s Libra
In Libra-specific events, caution over the Facebook-backed cryptocurrency continues to dominate headlines. As reported this past week, the European Central Bank (ECB) is being advised by ECB board member Yves Mersch that Libra could negatively impact the bank’s ability to set monetary policy.
“Depending on Libra’s level of acceptance and on the referencing of the euro in its reserve basket, it could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role,” Mersch said, as Reuters reported.
Trust issues may loom. “It is scheduled for release in the first half of 2020 by the very same people who had to explain themselves in front of legislators in the United States and the European Union on the threats to our democracies resulting from their handling of personal data on their social media platform,” Mersch said.
Facebook has said in the past that it wants to give 1.7 billion unbanked individuals access to financial services via the cryptocurrency.
Other voices joined the chorus of those concerned Libra would prove a headwind to monetary policy. Swiss National Bank Chairman Thomas Jordan echoed similar concerns late this week.
As Reuters reported, Jordan said that such problems would come as Libra would be linked to a basket of currencies.
More desirable would be a stablecoin linked to the Swiss franc alone, said Jordan, operating as what he termed “another Swiss franc-denominated form of money alongside bank deposits and cash. As long as prices, wages and loans are set in Swiss francs, the SNB can influence incentives for savers and borrowers via its monetary policy and thus ensure price stability over the medium term,” Jordan said in remarks prepared for a speech in Basel. “However, if stablecoins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.”