China Should Consider Launching Yuan-Backed Stablecoin, Central Bank Researcher Says
The Chinese government should pay close attention to the development of digital currency and consider launching its own yuan-pegged crypto stablecoin despite the current ban on cryptocurrencies, suggested an Op-Ed published on China Finance, a biweekly journal run by People’s Bank of China (the country’s central bank).
The opinion piece, titled “A Brief Analysis of Digital Stablecoins”, was co-written by a central bank researcher and a professor at Fudan University.
For starters, it gives an introduction to the rise and flaws of crypto stablecoins, and moves to the development of stablecoins globally with a brief review of USD-backed coins, such as the early days’ USDT, the recent stablecoin boom represented by regulators approved Gemini dollar (GUSD) and Paxos Standard.
With the rollout of stablecoins, most so far are anchored to the U.S. dollar, the authors express their concern that those digital USD would further strengthen the dominant role of dollar in the global monetary system, and crowd out other major fiat currencies that want to have a bigger play in the international market, with the Chinese yuan among them.
As such, the article suggests that in response to the recent stablecoin boom, China should step up its research efforts on issues related to digital currencies and learn from relevant experience to support domestic institutions to launch yuan-pegged crypto stablecoins.
While the authors also stated that transactions on other cryptocurrencies have to stay prohibited within China in accordance with the existing policies.
Shortly after the publication of the article, crypto exchange OKCoin’s founder Star Xu, said in a Weibo post that he believes
“The trend of issuing a CNH (Chinese yuan) stablecoin is inevitable. And OKCoin USA will participate in rolling out a regulated stablecoin”.
Will the country seize the opportunity to be a big player in digital stablecoin after abandoning bitcoin? Leave your comment below.