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China's aspirations for the yuan encounter challenges from stablecoin advancements

China's aspirations for the yuan encounter challenges from stablecoin advancements

Bitget-RWA2025/10/27 10:44
By: Bitget-RWA
- China's central bank warns stablecoin growth risks global financial stability, clashing with yuan internationalization goals. - Private firms like CLPS and WSPN expand stablecoin payment solutions, enabling real-time settlements with tokens like USDC. - Global adoption accelerates as Western Union tests stablecoin systems and Japan launches yen-pegged tokens, reducing remittance costs by 95%. - PBOC faces strategic dilemma: structural reforms needed to boost yuan's global role while managing decentralize

China’s central bank has sounded an urgent alarm about the swift growth of stablecoins, warning that they could threaten the stability of the global financial system. This comes as China’s efforts to promote the yuan internationally intersect with a surge of private digital asset innovation. The People’s Bank of China (PBOC) highlighted the importance of adjusting monetary policy to address these risks while still advancing the yuan’s global presence, as reported by an

. The warning arrives amid a wave of stablecoin payment platform launches by firms from Hong Kong to the British Virgin Islands, with and detailing new solutions for issuing and processing payments.

The PBOC’s apprehension stems from the expanding role of stablecoins—digital assets tied to government-issued currencies—which are increasingly facilitating instant settlements and reducing dependence on conventional banks. “Stablecoins could become a major force in global payments, potentially taking over some functions of bank deposits,” cautioned BOJ Deputy Governor Ryozo Himino in

. Private companies share this outlook: Incorporation, a fintech company based in Hong Kong, recently added stablecoin payment options to its credit card platform, allowing users to pay with , USDT, and other fiat-linked tokens. Likewise, Worldwide Stablecoin Payment Network (WSPN) introduced a stablecoin-based product for online merchants, offering immediate settlements and lower transaction costs.

China's aspirations for the yuan encounter challenges from stablecoin advancements image 0

The PBOC’s warning highlights a broader strategic challenge for China. Although expanding the yuan’s global use remains a priority, stablecoins could undermine these ambitions by providing quicker and more affordable alternatives to traditional international payments. China’s recent gold acquisitions and its push for a diversified monetary system reflect its desire to lessen reliance on the U.S. dollar, according to

. Still, experts believe that unless China implements significant reforms, factors like low interest rates and restricted access to its financial markets will limit the yuan’s global growth.

At the same time, stablecoin adoption is gaining momentum worldwide. Western Union, a leader in money transfers, has begun testing stablecoin-based settlement systems, taking advantage of regulatory clarity provided by the GENIUS Act in the U.S. to improve cross-border payments, as noted in

. Japan has also launched the first stablecoin tied to the yen, demonstrating the technology’s potential to transform payment systems. These trends have contributed to a $10 billion increase in crypto-powered remittances this year, with stablecoins slashing costs by as much as 95%.

The PBOC’s statement highlights the ongoing struggle between embracing innovation and maintaining regulatory oversight. While stablecoins offer greater efficiency, their decentralized structure makes it harder for central banks to steer monetary policy and safeguard financial stability. “This interest rate setup is not likely to stay the same indefinitely,” observed Louis Kuijs of S&P Global Ratings, emphasizing that more profound changes are necessary for the yuan to gain international traction.

As the stablecoin landscape continues to grow, regulators around the globe must decide whether to adapt to these changes or risk falling behind. For China, the future likely involves carefully balancing technological advancement with its larger geopolitical goals—a complex task in a rapidly evolving financial world.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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