China is exploring the launch of yuan-backed stablecoins as part of a strategy to expand the global use of its currency, signaling a potential shift in its digital asset policy. The move comes despite Beijing’s 2021 ban on cryptocurrency trading and mining.
The State Council, China’s top policymaking body, is expected to review a roadmap for stablecoins later this month. The plan reportedly includes targets for international yuan usage, regulatory guidelines, and risk management measures. Hong Kong and Shanghai are set to pilot local implementation if approved.
Stablecoins, digital tokens pegged to traditional currencies, are increasingly central to global finance, particularly those linked to the U.S. dollar. The yuan currently accounts for just 2.88% of global payments, its lowest share in two years, prompting Beijing to seek financial innovation to compete with the dollar.
However, China’s strict capital controls pose a major challenge. Broad international adoption of a yuan-backed stablecoin would require more flexible cross-border currency flows, despite existing connect schemes that allow limited offshore transactions.
The People’s Bank of China would oversee the execution of the initiative if the State Council approves it. Details are expected to emerge in the coming weeks.
