China aims to counter dollar-pegged stablecoins by advancing its digital yuan, aiming to fortify its standing in global trade and finance.
Threats of US stablecoins to the financial system
A recent report by Chinese media highlights concerns by the Communist Party regarding the US's growing interest in stablecoin development. The National Finance and Development Laboratory's report warns that US stablecoins have the potential to reshape global financial markets, necessitating China's acceleration of digital yuan adoption.
Expanding digital yuan use beyond retail
China was the first country to launch a CBDC. However, its use is confined to the retail sector. To effectively compete with US stablecoins, the digital yuan must expand its range to M1 and even M2, to gain wider acceptance in international markets.
Global need for stable digital currency
The report calls for China to create a stable digital currency and increase the use of tokens online. This aligns with European economists' statements on the need for a digital euro to reduce reliance on foreign payment service providers.
China is taking steps to bolster its digital yuan to effectively counter the influence of US stablecoins on the international stage.
