- China explores yuan-backed stablecoins through trusted state-owned firms in Shanghai.
- Shanghai leaders push digital currency research, eye stablecoin experiments with companies.
- Stablecoins may strengthen China’s cross-border payments and global financial position.
China might soon take a new step in the world of digital currencies. Recently, Chinese officials asked state-owned companies to explore launching yuan-backed stablecoins. Such stablecoins would be pegged to the Chinese yuan, which makes them stable in value and reliable.
Shanghai SASAC Urges Research into Digital Currencies, Stablecoins
According to local report, city leaders in Shanghai desire two government-owned organizations, a digital service provider and a local financial institution to research this concept. This information was anonymously spread by two officials since the plans are not publicly known at the moment.
In case the initiative is implemented, then large state-owned companies such as Guotai Haitong and Shanghai Data Group may conduct the experiments. The local government owns Guotai Haitong, and Shanghai Data Group processes major data of the city. They are both reputable names that may be able to do this job cautiously.
The step follows a key meeting last Thursday by the Shanghai State-owned Assets Supervision and Administration Commission, abbreviated as SASAC. In the meeting, SASAC Director He Qing requested local regulators and company leaders to monitor the new tech trends. According to him, they should research digital currencies. This indicates that the leaders of the Chinese city of Shanghai are listening to stablecoins.
China has been hard on crypto in recent years. Crypto trading and mining were prohibited by the government. A lot of crypto businesses were forced to close or relocate. This hard line might, however, be shifting gradually. Stablecoins do not resemble regular cryptocurrencies. They are supported by actual money or resources. Therefore, they are perceived as more secure and stable. This is the reason why China is considering employing them in a regulated manner.
Last month, the governor of the central bank of China, Pan Gongsheng, also discussed the issue of stablecoins. According to him, stablecoins may assist in cross-border payments. It is a crucial consideration to China, which desires to remain on the lead on digital finance. Chinese analysts are sure that soon stablecoins will become a sphere of rivalry between China and the United States.
Stablecoins Could Boost China Cross-Border Payment Links
Xiangcai Securities analyst Qiu Hua in Shanghai said that cross-border payments will probably be the first use of stablecoins. He further asserted that stablecoins would enable the economy of China to relate better with the world economy.
Shanghai forms a huge part of the Chinese growth strategy. It is the biggest city of the country in terms of GDP. The economy of Shanghai is valued at 5.4 trillion yuan or approximately 753 billion US dollars last year. Lots of large firms operate there, such as the gigafactory of Tesla and the leading chipmaker of the country, Semiconductor Manufacturing International Corp. Shanghai also boasts of Shanghai Stock Exchange which is one of the largest stock exchanges in the world.
Analysts reckon that stablecoins may be handy provided there are well-defined regulations. China Galaxy International Securities reported last week that stablecoins could be extremely prevalent in world finance if various nations can come into agreement on the way to regulate them.
The fact that China is interested in stablecoins indicates that the nation does not want to lose in the world of digital money. At this point, the concept remains at a planning phase. However, in case the plan of Shanghai works, China will be able to have its yuan-stablecoin soon. This would assist China to manage risks, enhance its economy and compete with other countries in the new digital world.
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