Libra Research Report of CCID Research Institute of the Ministry of Industry and Information Technology: Advocating China's Active Promotion of Digital Legal Currency Construction

Editor's Note: CCID Block Chain Research Institute is affiliated to China Electronics and Information Industry Development Research Institute (Ceddy). It is directly affiliated to the Ministry of Industry and Information Technology and has the function of providing decision-making advice to decision makers. This report analyzes Facebook's launch of Libra and suggests that China should actively promote the construction of digital legal currency.

On June 18, 2019, Facebook released the Libra white paper, proposing the establishment of a simple, borderless currency that would serve the financial infrastructure of billions of people. Libra is a cryptographic digital currency based on blockchain technology and managed by a dedicated association. Specifically, Libra is built on a secure, scalable, and reliable blockchain that maintains its value through real asset reserves, managed and developed by its independent associations. Users can send, receive, spend and protect their funds to achieve a more inclusive global financial system. The development of this financial services ecosystem ultimately leads to a global inclusive payment system.

Libra has attracted a lot of attention from all parties. Sherrod Brown of the United States called for a close review by financial regulators to ensure that users are protected. Republican MP Patrick McHenry pointed out: "As a policy maker, understanding the Libra program is our unshirkable responsibility. We need to go beyond rumors and speculation and provide a platform to evaluate the project and its unprecedented potential impact on the global financial system. "Indian regulations do not allow the use of banking networks for currency transactions based on blockchain technology. Bank of Japan Governor Haruhiko Kuroda believes that Libra should be treated with caution as a settlement payment method. Bank of England Governor Carney said that the Bank of England is open-minded but has not opened its doors to Libra. The government needs to consider its impact on currency and financial stability. Opponent Huffpost pointed out in an article titled "Facebook's Fake Currency Is A Joke" that many of the Libra white papers describe their structure and standards as vague summaries. Despite the most cutting-edge wording, its guiding ideology relies on the gold standard system. Critics argue that money is an inevitable political commodity, and that an international currency managed by a private entity without any democratic responsibility threatens international stability. Ma Huateng, chairman of Tencent’s board of directors, commented on Libra: “Technology is very mature and not difficult. Just look at whether regulation is allowed.”

Given Libra's grand vision, we must attach great importance to the impact of its development. We will conduct a detailed analysis from five aspects. First, a detailed analysis of its background, connotation and vision based on the Libra white paper; second, analysis of its main features, including stability, global payments, governance systems, etc.; third, to study the issues that need to be overcome, including regulatory issues, market issues , technical issues and internal governance; Fourth, study Libra's impact on China, especially on the payment system and Internet companies; Fifth, propose policy recommendations for the huge impact of Libra.

The full text of the report is as follows: