China Looking To Expand Range of Digital Yuan Amid Potential Monopoly of US Dollar-Pegged Stablecoins: Report

The deputy director of China’s National Laboratory of Finance and Development reportedly says that the country should expand the scope of its digital yuan amid President Trump’s embrace of cryptocurrencies. 

In an opinion piece posted on the official Chinese publication the Study Times, Zhang Ming says that stablecoins anchored to the US dollar dominate the digital currency space and will further strengthen the currency’s global monetary status.

“Once the US dollar stablecoin links the international credit of the US dollar more closely with the application scenario of the virtual world, it may greatly consolidate the hegemony of the US dollar.”

Last week, President Trump said that dollar-backed stablecoins will help maintain the US dollar as the top fiat currency in the world. He also called on Congress to pass legislation involving stablecoins and market structure.

To counter Trump’s moves to cement the US dollar’s supremacy, Zhang urges his nation to scale up the coverage of its digital yuan in terms of assets and reach.

“Expand the substitution range of digital RMB (renminbi) from M0 (cash) to M1 (cash plus demand deposit) or even M2 (cash plus all deposits) as soon as possible. Only by upgrading the substitution scope of digital RMB from M0 to M1 or even M2 can we comprehensively expand the application scenario of digital RMB, promote the domestic and foreign use of digital RMB and help the internationalization of RMB.”

He says another planned initiative is to ramp up the development of Chinese stablecoins.

“Expand the use of digital tokens on the internet platform and better combine the sovereign credit of RMB with the global application scenario of the Chinese platform. As long as the design and risk prevention are appropriate, expanding the use of digital tokens on these platforms can significantly expand the international monetary status of the RMB so as to meet the challenges of the US dollar stablecoin more calmly.”

According to Zhang Ming, China and other countries should issue their own fiat-backed crypto to keep the US from dominating the stablecoin and digital asset markets.

“The flourishing of various digital currencies is naturally better than the US dollar monopolizing the development track of digital currencies.”

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