Stablecoin Pegged to Offshore Renminbi: Hong Kong May Become a Testing Pioneer

Gate News bot news: Stablecoins have become a new battleground in international currency competition, with countries actively legislating to gain an advantage in the global payment system. There is much discussion in the market about whether China should issue a stablecoin pegged to the offshore Renminbi (CNH) to promote the internationalization of the Renminbi. Some believe that from the perspective of great power competition, China needs to take action, and Hong Kong could serve as a “pilot” city to issue CNH stablecoins and explore practical application scenarios, but the regulatory challenges must be addressed first.

The United States has recently accelerated the promotion of the “stablecoin bill” (GENIUS Act), which may further consolidate the dominance of the US dollar. State media have stated that the disorderly development of stablecoins may affect China’s financial system, but ignoring this tool could also mean missing out on the opportunity for currency internationalization.

Morgan Stanley’s Chief Economist for China, Xing Ziqiang, predicts that Hong Kong may first promote stablecoins pegged to the US dollar and the Hong Kong dollar, establishing technological and market trust before promoting CNH stablecoins. Supported by the offshore RMB funding pool, CNH stablecoins can verify cross-border settlement applications while avoiding violations of mainland capital controls or affecting domestic financial stability.