Author: Yang Tao, Deputy Director of the National Financial and Development Laboratory
Source: National Financial and Development Laboratory
The development model of the RMB stablecoin can be 'combined internally and externally'
Recently, Pan Gongsheng, the governor of the central bank, pointed out in a speech at the 2025 Lujiazui Forum that new technologies such as blockchain and distributed ledgers are driving the vigorous development of central bank digital currencies and stablecoins, while also posing huge challenges to financial regulation. In fact, with the Hong Kong (Stablecoin Regulation) set to come into effect on August 1, recent discussions about stablecoins have also welcomed unprecedented enthusiasm.
Generally, offshore RMB business refers to financial activities conducted in overseas markets with RMB-denominated settlements. Driven by policies, it presents a pattern centered on Hong Kong, with multi-point developments in places like Singapore and London. Domestic offshore RMB business reflects a dual characteristic of 'onshore' and 'offshore', operating mainly through account management, forming capital free flow under specific conditions. Correspondingly, many opinions suggest that offshore RMB stablecoins should be piloted in the Hong Kong market, and once conditions mature, explorations should be conducted in domestic offshore markets represented by free trade pilot zones.
We believe that stablecoins built in the Web 3.0 world have transcended the traditional offshore and onshore categories. To better achieve strategic coordination, proactive regulation, and collaborative advancement, we should consider adopting a linked development model of domestic offshore and foreign offshore RMB stablecoins. The reasons are as follows: first, in the face of the rapid development of USD-collateralized stablecoins and the rapid evolution of stablecoin regulation in various countries and regions, China urgently needs to actively conduct research and regulatory responses to stablecoins from the perspective of financial security and currency sovereignty, systematically consider the reform pilot of RMB stablecoins, rather than passively responding through offshore RMB stablecoins. Second, the scale of the Hong Kong RMB offshore market is limited, and under the requirement for a 1:1 reserve of stablecoins and fiat assets, it may be difficult to independently support RMB stablecoins to achieve economies of scale. Third, the regulation of stablecoin issuance and trading involves many cutting-edge challenges such as identity verification and anti-money laundering, and countries and regions are actively promoting regulatory innovation and seeking response ideas. In this regard, central authorities should play a leading role in the regulation of RMB stablecoins while seeking coordination and cooperation with Hong Kong regulatory authorities.
Since its establishment on September 29, 2013, the Shanghai Free Trade Pilot Zone has basically established a system that aligns with international trade and economic rules. At the same time, the central financial management department is fully supporting the construction of Shanghai as an international financial center to reach a higher level, and the central bank has announced eight measures, including conducting a comprehensive reform pilot for offshore trade finance services in the Shanghai Lingang New Area. Therefore, it is worth considering promoting the innovation and exploration of relevant RMB stablecoins in sync between the Shanghai Free Trade Pilot Zone and Hong Kong.
Regarding domestic offshore RMB stablecoins (CNY Coin, CNYC), one model could involve a clearing organization, large commercial banks, leading payment institutions, and well-known investment institutions jointly initiating the establishment of an RMB stablecoin issuing institution in the Shanghai Free Trade Zone, exploring the on-chain issuance and operation mechanism of the RMB stablecoin, and forming a wholesale market for RMB stablecoins targeting some authorized institutions (such as digital RMB operating institutions, which have accumulated relatively rich innovative experience) that can exchange RMB stablecoins for qualified enterprises or individuals, thus building a retail market for RMB stablecoins.
Model two could rely on some digital RMB operating institutions' branches in the Shanghai Free Trade Zone to directly mint and operate RMB stablecoins on-chain, and when redeeming to specific qualified economic entities, fully fulfilling compliance responsibilities. Of course, if banks are used as the issuing entities for stablecoins, on one hand, the tokenized deposits explored by offshore banks or related organizations, while having similar characteristics to stablecoins, still differ from the true stablecoin mechanism. On the other hand, some offshore banks, in order to respond to disintermediation challenges, have begun to explore or attempt to establish technology subsidiaries or jointly set up relevant legal entities to issue fiat currency stablecoins to increase their ecological appeal to customers and resist shocks from the crypto industry. Therefore, the exploration of RMB stablecoins in this model still needs to clarify specific paths and focuses.
It must be noted that regardless of the model, several requirements need to be met simultaneously. First, the RMB stablecoin must set sufficient asset reserves, which can include a certain proportion of digital RMB reserves in addition to high liquidity assets such as RMB cash and short-term government bonds, thus achieving coordinated advancement with the central bank's CBDC pilot reform. Second, the issuing entity of the RMB stablecoin is required to establish a sound compliance operation mechanism for risk identification, asset segregation and custody, internal controls, etc., to fulfill relevant compliance obligations towards direct clients, and to strive to cooperate with various parties to promote the expansion of application scenarios for the RMB stablecoin, effectively aligning with the key reforms of the free trade zone. Third, fully drawing on the characteristics of the 'electronic fence' of the FT accounts in the Shanghai Free Trade Zone, through innovative design of technical standards and smart contracts, the entities holding and using RMB stablecoins during the pilot period should, as much as possible, be limited to specific qualified institutions, enterprises, or individuals.
At the same time, regarding offshore RMB stablecoins (CNH Coin, CNHC), under model one, we can promote the establishment of an RMB stablecoin issuing institution jointly initiated by domestic and foreign institutions in Hong Kong, or under model two, allow certain authorized domestic banks or payment institutions to rely on their legal entities registered in Hong Kong to mint and issue offshore RMB stablecoins, which must comply with relevant laws and regulations in Hong Kong. This could form a dual RMB stablecoin system both domestically and internationally, while drawing on the existing cross-border payment and capital flow arrangements between the mainland and Hong Kong, exploring the exchange and interconnection mechanisms of CNYC and CNHC. Among them, CNYC is mainly used in the short term to supplement and enhance the payment and settlement efficiency of cross-border trade and business activities, while CNHC aims to further strengthen Hong Kong's position in the internationalization of RMB, and can be used compliantly for on-chain financial activities and transactions such as commodities, especially actively exploring support for RMB-based RWA (Real-World Assets), thus jointly striving to enhance the global influence of RMB and RMB assets.
It should also be noted that regulatory authorities both domestically and internationally, as well as RMB stablecoin issuing institutions, should work closely together to continuously promote intelligent technological innovation, effectively identify secondary market activities of RMB stablecoins in the blockchain ecosystem, especially monitoring the situation of domestic non-qualified entities holding RMB stablecoins, to prevent illegal capital flows and illegal activities.
Of course, as the Bank for International Settlements (BIS) pointed out, stablecoins still have defects in three key standards: singleness, elasticity, and integrity. The reform exploration of RMB stablecoins still needs to strictly control risks, proceed step by step, maintain moderate scale, and promote the formulation of relevant laws and regulations as soon as possible, thereby strengthening the discourse power in the global legal game of stablecoins. Looking to the future, we can also draw on BIS's proposal to build a 'Financial Internet' (Finternet) based on a Unified Ledger, synchronously promoting the coordinated development and complementary win-win of digital RMB, bank tokenized deposits, and stablecoins.
