China is considering yuan-backed stablecoins as part of a new international strategy, signaling a major policy shift on digital assets. The move could reshape cross-border finance but faces hurdles from capital controls.
China Eyes Yuan-Backed Stablecoins to Challenge Dollar Dominance
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State Council of China to Review Stablecoin Roadmap Amid Dollar Pressure
China is weighing the launch of yuan-backed stablecoins in a bid to expand the global footprint of its currency, according to a report from the Reuters publication. If approved, the policy would mark a major departure from Beijing’s hardline stance on digital assets since banning crypto trading and mining in 2021.
The State Council, China’s top policymaking body, is expected to review the new roadmap later this month. The plan reportedly includes specific targets for yuan usage in international markets, regulatory guidelines, and risk management measures, with Hong Kong and Shanghai set to fast-track local implementation.
Stablecoins, which are crypto tokens pegged to traditional currencies, have become a cornerstone of global digital finance, especially those tied to the U.S. dollar. With the yuan accounting for just 2.88% of global payments in June, its lowest share in two years, Beijing sees financial innovation as key to challenging dollar dominance.
Still, China’s strict capital controls remain a significant obstacle. While connect schemes allow limited offshore flows, broad global adoption of a yuan stablecoin would require greater flexibility in cross-border usage.
Details of the initiative are expected in the coming weeks, with the People’s Bank of China tasked to oversee execution if the State Council gives the green light.
