A quick follow-up from the story we shared yesterday about how the dominance of Chinese mobile phone companies in Africa could create a “walled garden” that would exclude Facebook’s proposed cryptocurrency Libra. Now, CNBC reports that the Chinese government is expediting the development of its own digital currency that could be far more appealing to Chinese tech companies operating in Africa, including Transsion, Huawei and ZTE among others.
Why Is This Important?
- The Chinese government has never liked Facebook, so it’s highly unlikely that Chinese companies operating in Africa, including many owned by the Chinese government itself, would allow Libra on its platforms.
- This is a battle over standards and the next generation of money: if U.S. regulators block Libra or Facebook’s Libra coalition collapses, China’s new digital currency could take root in places like Africa where it has embedded advantages thanks to the presence of services like WeChat and AliPay, meaning that Chinese standards in networking, mobile technology and mobile payments will shape the African digital finance landscape.
- A lot of African governments would probably prefer the Chinese digital currency standard: the anonymity that comes with some cryptocurrencies is rejected by autocratic governments who want to track the use of digital currency, particularly among political dissidents. China’s cryptocurrency is expected to come with added surveillance capability and will likely be embraced by a number of African governments who want to retain control over their currency and how it’s used.
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