China Explores Expanding Its Digital Yuan to Counter US Dollar-Pegged Stablecoins

The recent statement by the deputy director of China's National Laboratory of Finance and Development, Zhang Ming, has sparked a new discussion about the expansion of the digital yuan.

The deputy director of China’s National Laboratory of Finance and Development, Zhang Ming, has sparked a new discussed about the expansion of the digital yuan. In a article for the Chinese official newspaper Study Times, Ming detailed the need for his country to expand the reach of the digital yuan in light of the growing adoption of cryptocurrencies and recent foreign economic policies.

Among the topics touched upon by the deputy director was the growing threat posed by the US dollar-pegged stablecoins in the digital currency market, which he claims are putting the dollar’s ​​global dominance in an unassailable position. According to Ming, the administration of US President Donald Trump has been open in stating that it is working on legislating the market structure of such stablecoins, and the president himself has stated his preference for dollar-backed stablecoins as a means to preserve the US currency’s supremacy in the global economic landscape.

To respond to this, Ming proposed that the coverage of the digital yuan be expanded to cover everything from M0 (cash) to M1 (cash plus demand deposit) or even M2 (cash plus all deposits).

“Only by upgrading the replacement scope of the digital RMB from M0 to M1 or even M2 can we comprehensively expand the application scenario of the digital RMB, promote the domestic and overseas use of the digital RMB, and help the internationalization of the RMB,” explained the deputy director.

In addition, Ming highlighted the importance of developing Chinese stablecoins and expanding the use of digital tokens on global platforms, linking them to the RMB sovereign credit to more effectively address international challenges. He also suggested that the proliferation of various digital currencies backed by national fiat currencies would be more advantageous than letting the US dollar monopolize the cryptocurrency market.

“The flourishing of various digital currencies is naturally better than the US dollar monopolizing the development path of digital currencies,” said Ming.