China considers issuing stablecoin pegged to the Renminbi

China is contemplating a major policy move: allowing the issuance of a stablecoin pegged to the Renminbi (#CNY ). According to Reuters, this is the first time the Chinese government has considered this, aiming to promote the internationalization of the CNY and reduce dependence on the US dollar (USD).

Goals and Significance

Change of stance: This move marks a significant turning point, as China previously completely banned cryptocurrency trading.

Competing with the USD: If implemented, the CNY stablecoin could directly compete with USD-pegged stablecoins like USDT and USDC, which currently dominate the market.

Accelerating payments: The CNY stablecoin will make cross-border transactions faster, cheaper, and operate 24/7, becoming a potential alternative to traditional payment systems like #SWIFT .

Supporting the internationalization of CNY: This is a new tool for China to achieve its long-term goal of expanding the role of this currency in global trade and payments.

Challenges and Prospects

Despite its great potential, experts still believe the CNY stablecoin will face many challenges. China's strict capital control regulations could be a major barrier. #china

It is expected that the State Council will review this proposal at the end of August. If approved, this will be an important boost for the internationalization of the Renminbi, but legal and financial risk issues still need to be addressed.