Facebook: the best bulwark against Chinese financial ambitions?

Accused, cowardly, criticized but still standing. Mark Zuckerberg, the boss of Facebook, defended the Libra, his dematerialized payment method project, in front of a very upset American Congress, Wednesday, October 23.

He had to deal with the range of traditional criticism against his future and hypothetical digital currency: it would be a boon to drug traffickers, a threat to privacy or a danger to the global economic equilibrium.

Call for American patriotism

To defend himself, Mark Zuckerberg took the Chinese threat out of his hat. The Libra would represent, to hear it, the best hope to continue to guarantee the American financial supremacy on the world, and guard against Chinese ambitions. "As we debate, the rest of the world is not waiting. China is actively preparing to launch in the coming months similar ideas, "warned the CEO of Facebook.

In the context of diplomatic tensions between the United States and China, against the backdrop of the Hong Kong crisis and trade conflict, "Mark Zuckerberg falls back on the ultimate argument in the United States, appealing to American patriotism," says Nathalie Janson, economist and cryptomoney specialist at the Neoma Business School, contacted by France 24.

He even made a question of principle: "I think that the Libra will perpetuate the predominance of our democratic values ​​in the world," he said.

The argument may be puzzling. What is, in fact, the link between a new currency developed by a private entity, the defense of "democratic values" and the Sino-US balance of power on the international scene? "This is clearly the reaction of a man pushed to his limits to defend his project, but it also raises a real problem," says Nathalie Janson.

Libra vs e-yuan

Indeed, since 2014, Beijing has been developing its own dematerialized version of the yuan and is expected to make a major announcement on November 11 in this regard. The details concerning this e-yuan are still very limited. "We know that it should be a currency usable by all to make transactions and online shopping and it should rely on WeChat messaging and the giant Net Alibaba," says Nathalie Janson.

The goal would be to extend the aura of the Chinese currency internationally ... to the detriment of the dollar. China thought it had a head start because the Fed (US Central Bank) is still in the process of thinking about a dematerialized dollar. Facebook and his project Libra have however forced "to accelerate its calendar to release its dematerialized currency," says Nathalie Janson.

The Chinese authorities are eyeing emerging countries, particularly in Africa, where WeChat and Alibaba are present. It is also one of the main targets of Libra promoters who present this currency as a means of payment for populations excluded from the traditional banking circuit in developing countries.

"The battle ahead is to become the reference currency for e-commerce around the world," says the economist at the Neoma Business School. Facebook and Beijing do everything to be the first to draw "because in this area there is always a premium to the precursor," said Nathalie Janson.

The Chinese scarecrow

Hence the frustration of Mark Zuckerberg who argues that the reserves of US authorities against the Libra are the game of the Chinese. It also recalls that relying on a basket of currencies, much of which should be made up of dollars, the currency "made in Facebook" is part of the influence of the famous greenback in developing countries.

It also plays on the fears of defenders of individual freedoms against a cybercrime developed by the Chinese central bank. Authorities in China officially speak of "controllable anonymity" transactions through the dematerialized yuan, recalls the New York Times. One way to say that Beijing reserves the right to view the purchase history of those who would use its electronic currency.

Mark Zuckerberg wants to make believe that the Libra would be the best bulwark against the Chinese financial Big Brother. But the story of Facebook, marked by repeated scandals, does not necessarily encourage him to trust in the protection of privacy.

It is especially premature to sign the death sentence of the dollar as a reference on the international scene if China launches its e-yuan to the onslaught of the world. "There is nothing to ensure that this dematerialized currency will seduce," warns Nathalie Janson. The dollar is used much more than the yuan in international transactions, and it will first be necessary for Beijing to succeed in changing the habits. "We can trust China to allocate the necessary resources to promote their dematerialized currency - including offering products at lower prices in dollar - but it will take time," said the French economist.

For her, this case also illustrates the current propensity of the giants of Silicon Valley to brandish the Chinese threat as soon as they clash with national authorities, whether in the United States or Europe. Mark Zuckerberg did it to defend the Libra, but "the Gafa also defend themselves against the calls for their dismantling by saying that it would leave the field open to their Chinese competitor," says Nathalie Janson. The Chinese scarecrow has a good back ... except when it comes to doing business in China.