China Considers Yuan-Backed Stablecoin via State Firms

China Exploring Yuan-Backed Stablecoins

China is exploring the possibility of launching yuan-backed stablecoins through its state-owned enterprises. This move could represent a significant shift in China's approach to digital currencies, potentially strengthening its position in global finance.

• Yuan-Backed Stablecoins: China is considering stablecoins pegged to the yuan, offering stability and reliability.
• Shanghai's Initiative: Leaders in Shanghai are spearheading digital currency research and stablecoin experiments with local firms.
• Cross-Border Payments: Stablecoins could enhance China’s cross-border payment capabilities and global financial standing.

Chinese officials have tasked state-owned companies with exploring the launch of stablecoins backed by the Chinese yuan. These stablecoins aim to provide a stable and reliable digital currency option.

Shanghai SASAC's Focus on Digital Currency Research

According to a local report, Shanghai city leaders are encouraging government-owned organizations, including a digital service provider and a local financial institution, to delve into this concept. This initiative follows a meeting by the Shanghai State-owned Assets Supervision and Administration Commission (SASAC), where Director He Qing urged regulators and company leaders to monitor and research new tech trends, particularly digital currencies.

Potential candidates for these experiments include large state-owned companies such as Guotai Haitong and Shanghai Data Group. These firms are well-positioned to cautiously explore this new financial technology.

This move indicates a potential softening of China's stance on stablecoins, which are perceived as more secure due to their backing by actual assets. Governor of the central bank of China, Pan Gongsheng, has noted that stablecoins could facilitate cross-border payments, a key consideration for China in maintaining its leadership in digital finance.

Stablecoins and Cross-Border Payment Advantages

Xiangcai Securities analyst Qiu Hua suggests that cross-border payments are likely to be the initial application for stablecoins, enabling better integration of China's economy with the global market.

Shanghai, a major hub in China's growth strategy with a GDP of approximately $753 billion last year, hosts numerous large firms and the Shanghai Stock Exchange. Analysts believe that well-regulated stablecoins could be highly beneficial, with China Galaxy International Securities noting their potential prevalence in global finance if international regulatory agreements are established.

China's interest in stablecoins signals its intent to remain competitive in the digital currency landscape. If Shanghai's plan succeeds, China could soon launch its own yuan-stablecoin, enhancing its economic management, risk mitigation, and global competitiveness in the digital era.

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