China considers issuing yuan stablecoin

For the first time, China is considering allowing the issuance of Peg stablecoins backed by the yuan to expand the global role of this currency in trade and payments, according to Reuters. The Chinese State Council is expected to review and potentially approve a roadmap this month, including the goal of increasing yuan usage abroad, assigning responsibilities to domestic regulatory agencies, and providing risk management guidelines. If given the green light, this would be a major turning point in Beijing's digital asset policy, which has so far focused on the digital yuan issued by the Central Bank. However, policymakers recognize the clear advantages of stablecoins: near-instant cross-border payments, low costs, and 24/7 operations. A yuan stablecoin could compete with USD-pegged tokens like Tether's USDT or Circle's USDC, which currently dominate global stablecoin capital flows. This move comes as the yuan's usage in global payments dropped to 2.88% in June, the lowest in two years, compared to the USD's 47% (according to SWIFT data). Meanwhile, the US has also introduced a legal framework for stablecoins, putting pressure on China to define a clearer stance. In parallel, Hong Kong is deploying stablecoin licensing pegged to fiat currency to attract issuers and payment activities, while the People's Bank of China continues to expand e-CNY trials, emphasizing stablecoins' impact on cross-border payments and the desire to compete in efficiency and programmability. However, Chinese officials remain cautious about risks related to speculation and illegal financing. Last month, Beijing requested limiting stablecoin promotion on the mainland, and Shenzhen authorities also warned about scams involving fiat-pegged tokens.