China has been steadily expanding the use of digital currencies to boost the global reach of its yuan, or renminbi, as part of its long-term ambition to counter the dominance of the U.S. dollar in trade and finance. Now, fresh speculation suggests that Beijing could be considering a yuan-pegged stablecoin as part of a new plan to internationalise its currency.
Reuters reported that the State Council, China’s Cabinet, may soon issue a blueprint on yuan globalisation, potentially including a stablecoin backed by the yuan. Officials at the People’s Bank of China and the State Council Information Office did not respond to requests for comment.
Hong Kong sets the stage with stablecoin law
Hong Kong, which often acts as China’s testing ground for financial liberalisation, introduced stablecoin regulations on August 1. The rules require stablecoins pegged to the Hong Kong dollar to be fully backed by equivalent reserves.
Liu Xiaochun, deputy director of the Shanghai Institute of New Finance, wrote in Yicai.com that new rules would be needed for a yuan stablecoin if it were to circulate in Hong Kong, given the city’s role as the main offshore hub for the Chinese currency. Yuan still faces global hurdles
Despite China’s push, experts caution that capital controls and limited convertibility of the yuan remain the biggest obstacles to its global use. The renminbi accounts for less than 3 percent of global payment value, according to SWIFT data from June 2025, though it has a stronger role in trade financing at nearly 6 percent.
By comparison, the U.S. dollar dominates with a 47 percent share of global payments, followed by the euro, British pound, Canadian dollar, and Japanese yen. Most yuan transactions still happen in Hong Kong. What’s the difference: digital yuan vs stablecoin?
China has already launched its own central bank digital currency, the e-CNY, on a trial basis since 2019. Widely used across Chinese cities, it has processed over 7.3 trillion yuan in transactions as of July 2024, with some civil servants even paid in e-CNY. The digital yuan is also being promoted in Africa alongside Chinese business expansion.
But unlike the e-CNY, a stablecoin would not be issued directly by China’s central bank. Instead, it would operate on blockchain-based ledgers, pegged to the yuan’s value, and be regulated to ensure one-to-one backing with reserves. The global stablecoin race
The debate over a yuan stablecoin comes as the United States accelerates its own regulatory framework. President Donald Trump recently signed the GENIUS Act, a landmark law governing stablecoins, underscoring Washington’s push to set global standards for crypto-linked payments.
Supporters say stablecoins could make cross-border payments cheaper and faster, while critics warn they could bypass banking safeguards and open the door to illicit use.
Why it matters
For Beijing, a yuan stablecoin could be the next big tool in its bid to internationalise the renminbi and chip away at the dollar’s supremacy. But without easing restrictions on convertibility and access to financial markets, experts say the yuan’s climb on the global stage will remain an uphill battle.
(With inputs from Associated Press)
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