China's Strategy with the Regulated Yuan Stablecoin

Beijing's recent decision to introduce a regulated stablecoin pegged to the yuan represents a paradigm shift in global financial geopolitics. This move is not a reversal of its hostile stance towards decentralization, but rather the offensive phase of its digital currency strategy, using blockchain technology as a tool for state control and international influence.

Regulated Stablecoin vs CBDC

Technically, it is crucial to distinguish this new stablecoin from the already existing Digital Yuan. While the e-CNY is a Central Bank Digital Currency, meaning it is a direct responsibility of the People's Bank of China, this stablecoin will likely be issued by commercial entities under strict supervision of the PBoC.

It will operate on a controlled permissioned DLT blockchain, where only nodes authorized by the government will be able to validate transactions. This ensures absolute control and total visibility over each transaction, integrating surveillance directly into the asset's protocol. The guarantee will be 1:1 with the yuan, with auditable reserves held in state institutions.

Geopolitical and Financial Implications:

1. Acceleration of Yuan Internationalization: The main function of this stablecoin will be to serve as a new and efficient channel for cross-border payments. For BRICS nations and partners of the Belt and Road Initiative, it offers an almost instantaneous and low-cost alternative to the SWIFT system, which is predominantly dollar-based, accelerating China's de-dollarization agenda.

2. Programmable Money and Regulatory Control: A digital asset on a controlled DLT, this stablecoin is a form of programmable money. This allows the Chinese state to incorporate rules and controls directly into the asset, such as transaction limits, geographical restrictions, or even expiration dates, representing the pinnacle of Regulatory Technology.

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