Briefing: Chinese Economists on Stablecoins, Sovereignty and the Future of the RMB

Insights from: 1. Li Yang; 2. Mu Changchun; 3. Peng Wensheng; 4. Liu Xiaochun; 5. Wang Yongli; 6. Zhou Xiaochuan; 7. Zhu Guangyao; 8. Fan Wenzhong; 9. Frank M. Song; 10. Huang Yiping

The Trump administration’s relationship with the crypto community has been a source of fascination for scholars in China, both for what it reveals about the shifting political centre of gravity in the US, and for its implications for the future of the global financial system. Following the passage of the GENIUS Act by US Congress on 17 July, there are indications that Beijing is formulating a policy response. Shortly after the US legislation, the enactment of the Stablecoins Ordinance in Hong Kong established a licensing framework that will permit the issuance of stablecoins backed by the Hong Kong dollar and potentially the offshore renminbi.

Among senior economists in China, the role of stablecoins in reinforcing US dollar hegemony is seen as central to the case for a Chinese policy response. Yet a common refrain is that the proliferation of dollar-backed stablecoins may prove to be a “double-edged sword” for that very hegemony. On the one hand, they are broadening dollar application…