China is reportedly exploring the launch of yuan-backed stablecoins in a move that could reshape the global financial landscape and strengthen its bid to reduce reliance on the U.S. dollar.
According to Reuters, Beijing’s plans mark one of the most significant policy shifts to date in its approach toward digital assets.
Sources familiar with the matter revealed that China’s State Council is preparing to approve a new yuan internationalisation plan later this month. At the heart of the initiative lies the development of stablecoins backed by the Chinese currency, which are seen as a strategic tool to counterbalance U.S. dollar dominance in international trade and finance.
Fast-Track Rollout in Key Financial Hubs
The rollout is expected to be spearheaded by Hong Kong and Shanghai, with both financial centers tasked to accelerate the local implementation of the yuan-backed stablecoin system. Authorities view these cities as testing grounds for large-scale adoption, with potential expansion into global markets if the pilot proves successful.
Strategic Timing Ahead of Global Discussions
The move comes as China prepares to host a major summit in Tianjin, where officials are set to discuss broader strategies for expanding the yuan’s role in global trade and settlement. Analysts note that yuan-based stablecoins could provide a seamless and modern mechanism for international businesses to transact without relying on traditional banking channels dominated by the dollar.
A Major Shift in Policy
Until now, China has maintained a cautious approach toward cryptocurrencies, heavily restricting their use while developing its central bank digital currency (CBDC), the digital yuan. However, the introduction of a stablecoin backed by the yuan could complement its CBDC strategy while offering international users a more flexible entry point into yuan-denominated transactions.
Implications for the Global Financial Order
If implemented, yuan-backed stablecoins could provide a powerful new instrument for countries and corporations seeking alternatives to the U.S. dollar in cross-border payments. This development also signals Beijing’s intent to leverage blockchain technology as part of its broader economic strategy, potentially setting the stage for new competition in the stablecoin market, currently dominated by dollar-pegged tokens like USDT and USDC.
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Source: https://coindoo.com/china-eyes-yuan-backed-stablecoins-to-challenge-dollar-dominance/