Financial Times: RMB vs USD: China is seeking a path to enhance its international influence through digital currency technology
The Chinese government is increasingly viewing digital currency technology as a key tool to strengthen financial sovereignty and enhance international influence.
As the competitiveness between the RMB and the USD intensifies, stablecoins are seen as potential drivers for promoting the use of the RMB in global payments. At the same time, the Chinese government has realized that technologies that increase financial flexibility can also weaken the state's control over capital flows, so discussions about introducing stablecoins in China have strategic significance, far beyond a mere technical agenda. The Financial Times recently published an article stating that Hong Kong is becoming a cautious testing ground for this.
The article also pointed out that under the commitment to RMB internationalization and competition with the USD, China plans to allow the launch of the first stablecoins, but concerns about capital outflows have hindered the development of this technology in China.
Hong Kong is the testing ground for China's stablecoins. The Hong Kong Legislative Council recently passed a law allowing licensed companies to issue (any) fiat stablecoins (stablecoins pegged to legal tender). However, in fact, the Hong Kong Monetary Authority has taken a cautious stance and stated that only a "small number" of licenses will be issued from next year.
The Financial Times emphasized particularly that Chinese policymakers are paying increasing attention to stablecoins. It also wrote that the success of US dollar stablecoins has solidified the dominance of the US dollar in the global economy, but China's efforts to develop technologies that expand the use of the RMB conflict with the need to strengthen the regulation of its financial system.
Pan Gongsheng, Governor of the People's Bank of China, said in June this year that stablecoins fundamentally changed the traditional payment system. Over the past two months, Chinese financial regulators have been convening experts to discuss trends and strategies related to cryptocurrencies and stablecoins, and the speeches of participants and official information have confirmed this.
One of the participants said that the main conclusion of the meeting was that any stablecoin project implemented in China must comply with the specific regulations of the country. In addition, representatives of financial institutions repeatedly emphasized the risk of capital outflows that stablecoins could bring. The Hong Kong Monetary Authority has publicly discussed the risk of stablecoins being used for money laundering, which is also a concern of the Chinese government.
According to a fintech official familiar with the process, the Hong Kong Monetary Authority has strict requirements for candidate pilot companies of stablecoins regarding implementation plans, human resources, and how to resolve legal disputes. The Hong Kong Monetary Authority does not rule out the possibility of approving licenses for offshore RMB stablecoin issuers.
The Financial Times concluded in the end that China has long sought to expand the use of the RMB in cross-border payments, and stablecoins are especially attractive in this regard because they can bypass some traditional payment systems, such as SWIFT, and if a dispute arises, the SWIFT system may impose restrictions on China.
Original: https://www.toutiao.com/article/1839729297904906/
Statement: This article represents the views of the author.