China Weighs Yuan-Backed Stablecoins to Enhance Global Currency Role

TIANJIN, Aug 20 (Reuters) – China’s State Council plans to approve a key roadmap soon. This will allow yuan-backed stablecoins. It’s a big change to boost the renminbi in cross-border payments and compete with the U.S. dollar.

Beijing’s top leaders have changed their stance on cryptocurrency. They now see stablecoins as vital for making the yuan more global./strong>. The new plan will set clear goals for yuan use in global markets. It will also outline the roles of domestic regulators and create strict guidelines for risk prevention./strong>.

Key elements of the proposal include:

By the end of the month, top leaders will meet for a study session. They aim to set clear boundaries for stablecoins and discuss their business applications.

Speed up implementation in Hong Kong and Shanghai. Local regulators will run pilot programs for fiat-backed digital tokens.

China is getting ready for the Shanghai Cooperation Organisation summit on Aug. 31 and Sep. 1. They aim to boost the use of stablecoin and yuan in trade with Eurasian partners.

The People’s Bank of China and other financial authorities will handle the creation of rules for permits, compliance checks, and protections for consumers.

China wants the yuan to match the U.S. dollar and euro. However, tight capital controls and low offshore liquidity have held it back. Using stablecoins allows fast, low-cost, and global transfers. This new method helps avoid traditional payment systems and boosts the renminbi’s role in digital finance.

U.S. officials are establishing rules for dollar-pegged cryptocurrencies. On the other hand, China’s shift signals a larger goal: to protect its trade and finance from U.S. control. Market participants are cautious. They believe China’s capital restrictions could hinder stablecoin adoption. Right now, global stablecoin issuance stands at around US$247 billion and might reach US$2 trillion by 2028.