"China to Introduce Yuan-based Stablecoin"

Shift from 'Digital Asset Ban'

The Chinese government is introducing a yuan-based stablecoin. This marks a departure from its previous policy banning digital assets, interpreted as a strategy to expand yuan usage and challenge the dominance of the US dollar.

Reuters reported on the 21st, citing sources, that the State Council of China is expected to review and approve the "yuan internationalization roadmap" at a meeting later this month. The plan reportedly includes objectives for expanding the use of the yuan in global markets, the regulatory roles of financial authorities, and risk management guidelines. The Chinese leadership is expected to soon outline the scope and future direction for the use of stablecoins.

Hong Kong and Shanghai are likely to serve as forward bases for policy implementation. As of the 1st of this month, Hong Kong implemented regulatory measures on stablecoin issuers. Shanghai is pursuing the establishment of an international operations center for the digital yuan. From August 31 to September 1, China also plans to make cross-border payments using the yuan and stablecoins an agenda item at the Shanghai Cooperation Organization (SCO) summit held in Tianjin.

If the introduction of stablecoins is confirmed, China will reverse its digital asset policy for the first time in four years since banning cryptocurrency trading and mining in 2021 due to concerns over financial stability. Despite being the world's second-largest economy, the international stature of the yuan remains low due to strict capital controls and a large trade surplus. As of June, the yuan accounted for just 2.88% of global payments, its lowest in two years. The gap with the US dollar (47.19%) remains significant.

Hyein Lee hey@hankyung.com