China is contemplating the introduction of yuan-backed stablecoins as part of a strategic initiative to bolster the international use of its currency, according to sources familiar with the matter. This marks a significant shift in China’s previous stance on digital assets.
The State Council, China’s cabinet, is expected to review and potentially approve a comprehensive roadmap later this month. The plan aims to increase the global usage of the yuan and includes guidelines for risk prevention and the roles of domestic regulators. Senior leadership is anticipated to convene for a study session focusing on yuan internationalization and stablecoins, with discussions likely to define the scope and development of stablecoins in business applications.
Stablecoins, digital currencies pegged to fiat assets, offer low-cost, instant global transactions and have gained popularity worldwide. Currently, over 99% of stablecoins are tied to the U.S. dollar. China’s proposed plan includes implementation by the People’s Bank of China, with initial deployment in cities like Hong Kong and Shanghai. Hong Kong has recently enacted regulations for fiat-backed stablecoin issuers, reinforcing its role in China’s digital currency agenda.
The initiative coincides with geopolitical tensions with the U.S. and the rising use of dollar-backed stablecoins by Chinese exporters. Further discussions are expected at the upcoming Shanghai Cooperation Organization (SCO) Summit in Tianjin.
This move represents a departure from China’s previous cryptocurrency crackdowns in 2021 and signals a potential shift towards embracing digital currencies as tools for enhancing the global standing of the yuan.
