China Weighs Yuan-Backed Stablecoins as Kenya Seeks $5 B Debt Swap

Kenya’s Treasury said it is negotiating with Chinese lenders to convert roughly US$5 billion of existing dollar-denominated loans into yuan and to extend their maturities. The proposed swap, covering about one-eighth of Kenya’s US$40.5 billion external debt, could halve interest costs and trim debt-service outlays by about US$1 billion a year, according to the ministry. The World Bank is Kenya’s largest external creditor at US$14.4 billion, followed by Eurobond holders at US$7.5 billion, with China ranking third.

The talks coincide with a broader push by Beijing to raise the renminbi’s profile in global finance. People familiar with the matter told Reuters that China’s State Council will later this month review a roadmap that would, for the first time, allow yuan-backed stablecoins. Hong Kong and Shanghai are expected to pilot the tokens quickly, and officials plan to discuss wider yuan usage—including possible stablecoins—at the Shanghai Cooperation Organisation summit in Tianjin on 31 Aug.–1 Sept.

If endorsed, the change would mark a sharp turn from China’s 2021 ban on cryptocurrency trading and mining. Dollar-pegged tokens now account for more than 99 percent of the US$247 billion global stablecoin market; the yuan handles just 2.88 percent of world payments, versus 47.19 percent for the greenback, SWIFT data show. Allowing stablecoins and negotiating bilateral debt repricings such as Kenya’s highlight Beijing’s intensifying effort to chip away at the dollar’s dominance in trade and cross-border finance.

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