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New Straits Times
14 hours ago
- Business
- New Straits Times
China's tech giants lobby for offshore yuan stablecoin, sources say
KUALA LUMPUR: China's tech giants and Alibaba affiliate Ant Group are urging the central bank to authorise yuan-based stablecoins to counter the growing sway of US dollar-linked cryptocurrencies, people with direct knowledge of the discussions said. The two firms propose that China allow the launch of stablecoins in Hong Kong pegged to its offshore yuan to help promote global use of the Chinese currency and fend off the dollar's growing digital influence, the two sources said. The moves come as Hong Kong races the United States in setting up a regulatory framework for stablecoins, competing for a greater reach in global digital finance and trade. Their lobbying efforts, if successful, would mark a major shift in the way Beijing views cryptocurrencies — which it banned in 2021 — and could reshape China's strategy in promoting international use of the yuan. Stablecoins are digital tokens, in the form of cryptocurrencies pegged to liquid assets, so far mostly the US dollar but also in some cases gold or other currencies. Their underlying blockchain technology enables instant, borderless and round-the-clock transfer of funds at low cost, giving them the potential to disrupt traditional cross-border payment systems. Both and Ant already plan to issue stablecoins backed by the Hong Kong dollar, after the island's new legislation takes effect on August 1. But in closed-door discussions with the People's Bank of China (PBOC), has argued that offshore yuan stablecoins are urgently needed as a tool to promote yuan internationalisation, the sources told Reuters. Such a view has also been expressed by other industry players. "The global expansion of US dollar stablecoins is posing fresh challenges to yuan internationalisation," Wang Yongli, co-chairman of Digital China Information Service Group, said in an article posted on his social media account last month. "It would be a strategic risk if cross-border yuan payment is not as efficient as dollar stablecoins," said Wang, former vice head of Bank of China. The PBOC, and Ant did not immediately respond to Reuters' requests for comment. Dollar dominates The global stablecoin market is currently small at about US$247 billion, according to crypto data provider CoinGecko. However, Standard Chartered Bank estimates it could grow to US$2 trillion by 2028. Over 99 per cent of stablecoins are US dollar-denominated, according to the Bank for International Settlements. China has long harboured ambitions for the yuan to be a global currency, similar to the euro or dollar and reflecting its weight as the world's second-biggest economy. One roadblock to this aim, however, is its reluctance to remove tight capital controls. The yuan's share as a global payment currency fell to 2.89 per cent in May, the lowest in almost two years, according to payment platform SWIFT. The dollar commands a 48.46 per cent market share. "China has reached a point where it can no longer avoid taking action," said Xiao Feng, chairman of Hong Kong-based crypto exchange operator HashKey. Many Chinese exporters now use dollar stablecoins as "more and more overseas merchants are sending payments in USDT," he said, referring to the world's most popular stablecoin, Tether. Several exporters told Reuters capital controls at home, geopolitical tensions and the risks of currency volatility in smaller emerging markets have spurred the shift into stablecoins. Crypto HK, Hong Kong's biggest crypto over-the-counter (OTC) exchange, said the monthly volume of trading in the USDT token by its Chinese clients for trade settlement purposes has jumped five-fold since 2021. Inevitable? Marking a major US shift, President Donald Trump backed stablecoins days after his inauguration in January and is establishing a regulatory framework that helps legitimise dollar-pegged cryptocurrencies. Even in China, where cryptocurrencies remain banned, policymakers are becoming increasingly interested in stablecoins. PBOC governor Pan Gongsheng said last month the boom in digital currencies and stablecoins poses huge challenges to financial regulation. PBOC adviser Huang Yiping told local media in a recent interview that an offshore yuan stablecoin in Hong Kong is "a possibility". Ant is preparing to apply for stablecoin licences in both Hong Kong and Singapore, one of the sources said. Ant is also preparing for offshore yuan stablecoins, he said. chairman Richard Liu has also disclosed plans to apply for such licences in major currency countries globally, in a bid to facilitate foreign exchange and cross-border payments. In discussions with the PBOC, argued a yuan-pegged stablecoin was needed because the Hong Kong dollar is pegged to the US dollar, which does not help promote the yuan's use in trade, one of the sources said. has proposed China allow yuan stablecoin issuance in Hong Kong, before expanding the pilot scheme to offshore markets within China's free trade zones, said a company source, adding the suggestion had been well received by regulators.
Saba Yemen
2 days ago
- Business
- Saba Yemen
US dollar declines against Chinese yuan
Beijing - Saba The US dollar declined against the Chinese yuan during trading on Tuesday in the Chinese market. The People's Bank of China's (PBOC) reference rate today reached 7.1534 yuan per dollar, down 52 pips from yesterday's 7.1586 yuan, after a 15-pips rise. Chinese regulations allow the yuan to rise or fall by 2 percent from the central bank's reference rate on each trading day in the spot foreign exchange market, according to Xinhua News Agency. Whatsapp Telegram Email Print more of (International)
Business Times
2 days ago
- Business
- Business Times
China urged to embrace stablecoins as US moves to cement lead
China faces growing calls from policy advisers and economists to explore using stablecoins for cross-border payments, as the US moves to entrench the US dollar's dominance through crypto technology. While China has not formally embraced stablecoins – digital tokens pegged to traditional currencies – and maintains a sweeping ban on crypto activities, recent remarks from senior central bank officials have given fresh momentum to discussions about their potential role in global payments. The People's Bank of China (PBOC) governor Pan Gongsheng said in June that stablecoins could revolutionise international finance, particularly as rising geopolitical tensions highlight the fragility of traditional payment systems, which he warned can be politicised and used as a sanction tool. At the same Shanghai event, former central bank governor Zhou Xiaochuan said US dollar-linked stablecoins could facilitate dollarisation. Other mainland and Hong Kong financial officials talked about the potential for yuan-based stablecoins to support China's long-running effort to promote its currency on the world stage. Beijing has long been wary of cryptocurrencies, viewing it as a threat to financial stability and capital controls. But economists now see an opening, fuelled in part by the Trump administration's growing support for digital tokens. Morgan Stanley suggests China could use Hong Kong to trial offshore yuan-based stablecoins that would avoid violations of Beijing's strict capital rules. 'Stablecoins are not new currencies, but new distribution channels for existing ones,' said Robin Xing, chief China economist at Morgan Stanley. 'It is crucial for China to embrace the trend of sovereign currency tokenisation to maintain competitiveness in the digital infrastructure race.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Just hours before Pan and other Chinese officials spoke at the Jun 18 Lujiazui Forum, the US Senate passed a bill regulating stablecoins, in a major win for the crypto industry and a boost for US President Donald Trump's digital asset agenda. Treasury Secretary Scott Bessent said in a Jun 19 X post that stablecoins could strengthen, not threaten, the US dollar's dominance. He told Bloomberg TV on Monday (Jun 30) that global users are likely to favour US-backed stablecoins over central bank digital currencies from Europe or China, citing greater trust in the private sector under US regulation than the risk of government control elsewhere. Stablecoins, typically backed by traditional currencies and issued by private firms, are gaining traction as a faster, cheaper option for cross-border payments. Most are pegged to the US dollar and backed by US assets such as short-term Treasuries, with total supply projected to reach US$3.7 trillion by 2030. In response, Chinese economists are urging the development of yuan-linked alternatives. chief economist Shen Jianguang warned that without such efforts, China risks falling behind in the race for next-generation currency leadership. Founder Richard Liu reportedly told staff the company plans to apply for stablecoin licenses in all major markets to cut cross-border payment costs by 90 per cent and reduce settlement time to under 10 seconds. Hong Kong has recently introduced its own regulatory framework for fiat-referenced stablecoins, offering licenses to issuers operating in the city. and Ant Group are among the first tech giants expected to apply. Shanghai-listed Zhejiang China Commodities City Group, operator of the world's largest wholesale goods market, has also said it plans to seek a license. Offshore yuan stablecoins could help China take advantage of mounting global unease with US dollar dominance, especially after it was used as a tool of financial pressure following Russia's invasion of Ukraine. Interest in the yuan is growing, with more than 30 per cent of China's goods trade settled in the currency in February, the highest in a decade, though its share in global payments remains modest. The growing interest in stablecoins comes as China's own state-backed digital currency, the e-CNY, has struggled to gain traction both at home and abroad. A separate cross-border payments initiative, mBridge, is facing an uncertain future after a main participant, the Bank for International Settlements, pulled out over concerns it could be used to bypass sanctions. Pan recently announced plans for an international e-CNY centre in Shanghai, signalling continued interest in promoting its use for trade. China should take a 'dual track' approach to bolster the yuan's global use, according to Li Yang, chairman of the state-backed National Institution for Finance and Development and a former PBOC adviser. That would involve continuing traditional efforts, such as expanding currency swaps and the yuan-based Cips settlement system, while also leveraging Hong Kong's financial institutions to promote offshore yuan-linked stablecoins. For now, stablecoins are mostly used for crypto trading instead of business payments, and regulators still need to address risks such as fraud and financial crime. While many countries are exploring regulations, key questions remain, such as whether stablecoins should be treated as currencies or financial assets. Chinese stablecoins may face limits without broader economic reforms, according to Eswar Prasad, a Cornell University professor and author of the book The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance. 'Yuan-linked stablecoins issued in Hong Kong are unlikely to gain much traction in the absence of unification of onshore and offshore exchange markets,' he said. But stablecoins, he added, could nudge Beijing towards change. By complicating exchange rate and monetary policy management, they might 'serve as an incentive to undertake liberalisation and market-oriented reforms', he said. BLOOMBERG
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Business Standard
6 days ago
- Business
- Business Standard
China's central bank vows faster policy response to economic conditions
China's central bank said on Friday that it would adjust the pace and intensity of policy implementation in response to domestic and global economic and financial conditions. The world's No.2 economy has faced pressure this year due to U.S. President Donald Trump's imposition of tariffs on Chinese products and persistent deflationary pressure at home. "The external environment has grown increasingly complex and challenging, with weakening momentum in global economic growth, rising trade barriers, and diverging economic performance among major economies," the People's Bank of China (PBOC) said in a summary of its quarterly monetary policy committee meeting. The economy "still faces difficulties and challenges such as insufficient domestic demand, persistently low price levels, and multiple hidden risks," the bank said. "It is suggested that the intensity of monetary policy adjustments be increased, and the forward-looking, targeted and effective nature of monetary policy adjustments be enhanced," it added. In May, the PBOC unveiled a raft of easing steps, including interest rate cuts and a major liquidity injection, as Beijing stepped up efforts to soften the economic damage caused by the trade war with the United States. Investors are watching for signs of fresh stimulus from an expected Politburo meeting in July as well as clues from an anticipated plenum later this year, where top party leaders are likely to discuss the country’s 2026â€'2030 five-year plan. "On the monetary policy front, we do not expect an aggressive move unless there is a wholesale change in the leadership's economic belief," analysts at ANZ said in a note. ANZ expects the central bank to cut its key interest rate by 10 basis points ahead of the expected Politburo meeting, followed by a further 30-basis-point reduction after the party plenum, likely in August, the analysts said. The PBOC said it would guide financial institutions to step up credit supply, and push for the lowering of overall social financing costs. It also pledged to enhance the resilience of the foreign exchange market, to guard against the risk of exchange rate overshooting, and to keep the yuan exchange rate "basically stable at a reasonable and balanced level". On the beleaguered property market, the bank said it would increase efforts to revitalise existing commercial housing and land inventory, and continue to consolidate the "stable momentum" in the sector.
Forbes
25-06-2025
- Business
- Forbes
China Market Update: Six Agencies Announce 'Financial Support To Boost & Expand Consumption'
CLN Asian equities cheered the confirmation of the de-escalation in the Middle East and a potential July US interest rate cut, led by Hong Kong, Mainland China, and Taiwan. China's markets grinded higher across the trading day on strong volume and breadth. The key catalyst was that six Chinese government agencies announced the release of the "Guiding Opinions on Financial Support to Boost and Expand Consumption" following the State Council's guidance on expanding 'financial support to boost and expand consumption'. The People's Bank of China (PBOC), National Development & Reform Commission (NDRC), Ministry of Finance (MoF), Ministry of Commerce (MoC), China Banking & Insurance Regulatory Commission (CBIRC), and the China Securities Regulatory Commission (CSRC) release focused on six topics and 19 key measures to 'combine the implementation of the strategy of expanding domestic demand with deepening the structural reform of the financial supply side, increase the investment in the financial resources provided by consumption, and improve the level of financial services for consumer demand'. The measures include: The NDRC will host a press conference tomorrow on the subject. Vice Premier He Lifeng was in Hebei to 'conduct on-site research on the exchange of old appliances for new ones, real estate development and sales'. Premier Li spoke at the Summer Davos in Tianjin, stating that China's status as a "super-sized consumption powerhouse' will be upheld. It seems to be a recurring theme! Hong Kong and Mainland-listed financial stocks had a strong day, led by brokers and insurance as beneficiaries of the push to expand use of the plan to expand and promote personal pensions and annuities. Also helping brokerage stocks was Guotai Junan International, which gained +198% after being approved by Hong Kong's Securities and Futures Commission (SFC) to allow crypto trading. Internet stocks had a good day as well, as it was a very broad rally in both markets. Mainland investors bought a healthy $1.22 billion worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect today, as 53% of Hong Kong trading was Connect-related. To me, this continues to show a lack of foreign investor involvement, despite the strong rally since January 2024. The Mainland market is finally showing some animal spirits as 117 stocks hit 52-week highs versus only 4 hitting 52-week lows. Mainland military stocks outperformed on news that a military parade will be held on September 3rd, celebrating the 80th anniversary of the end of World War II All told, it was a strong day! New Content Read our latest article: Navigating Global Crosswinds: Carbon Markets Respond to Tariff Tactics and Executive Orders Please click here to read 1 Chart1 Chart2 Chart3 Chart4 Chart5 Chart6
