Huang Qifan, the former mayor of Chongqing, has joined the chorus of voices questioning Facebook’s Libra coin, saying the digital token is set to fail
Issuing digital currencies that could compete with sovereign money is ‘delusional’, says the prominent Chinese political figure
A prominent Chinese political figure has joined the chorus of voices around the world raising questions about the viability of Facebook’s Libra digital currency, describing the coin as a “delusional” project that is destined to fail.
Huang Qifan, the former mayor of Chongqing in southwest China, said decentralised blockchain-based currencies that could compete with sovereign money were inappropriate in the current era and China’s central bank approved digital coin  was far more likely to succeed.
“Some companies are trying to challenge sovereign currencies by issuing bitcoin and Libra – this is delusional to me,” Huang said on Monday in his keynote speech at the Bund Summit, a financial conference in Shanghai.
“If commercial companies can issue various currencies, this world will be in chaos. That is equivalent to returning to the primitive society. This is ridiculous, so I personally believe that Facebook’s Libra would never be a success.”
Some companies trying to challenge sovereign currency by issuing bitcoin and Libra – this is delusional to me
Working alongside now-disgraced Chongqing party chief Bo Xilai, Huang is best known as the architect of the city’s rapid economic rise from 2013 onwards, with the city’s gross domestic product (GDP) growth outperforming any other city in the country between 2014 and 2016, earning him the nickname “the CEO of Chongqing”. While Bo was jailed on corruption charges, Huang has moved on to become the vice-chairman at the China Centre for International Economic Exchanges think tank.
Facebook announced in June it would launch a digital coin backed by a basket of freely convertible currencies, excluding the yuan. But the plan has faced widespread scepticism  from central bank leaders and regulators around the world, who fear it could disrupt the global financial system by undermining monetary sovereignty, allow capital flight and data privacy abuse.
The blockchain currency project has also seen the recent withdrawal of early backers including Mastercard, Visa, PayPal and eBay.
Facebook founder Mark Zuckerberg faced an hours-long grilling by lawmakers from the US House Financial Services Committee last week in which he was forced to defend the project against a range of concerns, ranging from global financial stability to the social media giant’s record on privacy.
Zuckerberg acknowledged Libra was “risky” and conceded Facebook had made mistakes in the past, but he also told lawmakers the project was essential to projecting American financial leadership around the world and any delay could give China the upper hand.
The People’s Bank of China (PBOC) has been developing its own digital currency and it is believed to be close to launch. China’s digital currency would be tightly controlled by the government rather than based on a decentralised system that underlies cryptocurrencies like bitcoin and does not require administration from a central authority.
Huang said the PBOC’s study of the field was “reaching maturity” and “China’s central bank may be the first central bank in the world to issue digital currency”.
“For sovereign states, the best practice is to issue sovereign digital currencies through the government and the central bank,” he said. “The issuance of digital currency should be linked to sovereign credit, national GDP, fiscal revenue, and gold reserves.”
Huang also criticised the “low efficiency” of Swift and the Clearing House Interbank Payments System (CHIPS), saying the two financial transaction providers are “outdated and have no future” and should be replaced by an international cryptocurrency payment network.
“Swift and CHIPS are gradually becoming the financial instruments for the United States to exercise global hegemony and carry out long-arm jurisdiction,” he said. “Historically, the United States has launched several financial wars with the help of the Swift and CHIPS systems. There is a certain risk associated with a high degree of reliance on them.”
Michael Moon, the managing director, payments, trade and communications for Asia-Pacific at Swift, who was in the spectator seats at the summit, declined to comment on Huang’s remarks.