Facebook CEO Mark Zuckerberg told lawmakers on Wednesday that China will launch a digital currency in the “next few months” as part of the country’s “Belt & Road” strategy, a program designed to exert Chinese economic influence worldwide.
Zuckerberg’s remarks came during a contentious hearing before the House Financial Service Committee about Facebook’s plans for a cryptocurrency enterprise known as Project Libra.
In his testimony, Zuckerberg repeatedly tried to frame Facebook’s cryptocurrency plans in the context of global financial innovation, and the risk of China taking the lead in the field. His message to politicians was that they should let Project Libra move forward even if they have misgivings about it or risk giving China the upper hand.
“Chinese companies would be the primary competitors,” said Zuckerberg. “They’re very focused on building and exporting this around the world.”
He also noted that if China was able to make its cryptocurrency a global standard, it would undercut the ability of the United States to pursue sanctions and exert geo-political influence through the financial system. His arguments appeared to gain traction among some members.
Others, however, accused Facebook of attempting to undercut the U.S. dollar with Libra, which has been proposed as a digital coin pegged to a basket of global currencies. Rep. Blaine Luetkemeyer (R-MO) asked Zuckerberg how Facebook would prevent Project Libra, which is designed to be run as an independent non-profit, from replacing U.S. dollars in the basket with Chinese yuan.
In response, Zuckerberg noted that Facebook is also open to designing Libra as a digital equivalent of sovereign currencies basically a crypto copy of the the U.S. dollar. He also pledged not to launch Project Libra anywhere in the world without sign-off from U.S. regulators.
Zuckerberg’s suggestion that Facebook might design Libra to be purely dollar-backed appeared to win support from some members, including Rep. Steve Stivers (R-OH), who urged Zuckerberg to abandon plans for a basket currency.
“You may have bitten off more than you can chew by trying to create a private currency,” said Stivers, who said it will be easier for Facebook to comply with anti-money laundering laws if it designs a digital dollar rather than a basket currency like Libra.