China is mulling the release of yuan-backed stablecoins to boost the global use of its currency, according to a report from Reuters.
Citing unnamed sources “familiar with the matter,” Reuters says China is in the middle of a major pivot in its stance on digital assets.
The sources – who asked not to be named because they’re not supposed to be talking to the media – say that China’s State Council will review and then potentially approve a roadmap later this month for launching the new product and working to catch up with the US on stablecoins.
Details of the plan are expected to be publicly revealed in the coming weeks. The country’s regulators and its central bank, the People’s Bank of China (PBOC), are being assigned implementation duties, according to the sources.
The global stablecoin market, which is almost entirely dominated by US dollar-pegged products, is at $281 billion. Some industry insiders have speculated that in the future, stablecoins could help prop up the bond market, providing more demand for US Treasuries, given that stablecoin companies typically park their reserves in T-bills.
White House Crypto Czar David Sacks has mentioned that other economies outside the US could start to “dollarize” as stablecoins become more viable than their own domestic currencies.
“…the [stablecoin] float is expected to grow from, call it, roughly $250 billion to trillions of dollars. And that would create more demand for the US dollar internationally. I think you could see other economies start to dollarize from the bottom up as their citizens would prefer to use US digital dollars as opposed to whatever fiat currency they’re using. And that would create potentially trillions of dollars of new demand for US treasuries.”
At time of writing, it’s not yet clear how a potential yuan-pegged stablecoin would be backed.
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