Hong Kong Economic Journal: Stablecoin anchored to offshore RMB, Hong Kong can become a pilot

Mars Finance News, on July 2nd, according to the Financial Times, stablecoins have become a new battlefield for international monetary competition, with countries accelerating legislation to gain an advantageous position in the global payment system. The focus of current market discussion is whether China should issue a stablecoin pegged to offshore RMB (CNH) to accelerate RMB internationalization. Some analysts believe that from the perspective of great power competition, China has reached a moment where it must respond, and Hong Kong can serve as a "pilot" city to issue CNH stablecoins and explore practical application scenarios. However, the premise is to first resolve regulatory challenges such as anti-money laundering. China has traditionally maintained a conservative attitude towards cryptocurrencies, but has recently begun to pay attention to stablecoins due to former US President Trump's comprehensive shift in stablecoin regulation. The US Congress is rapidly advancing the GENIUS Act, and Trump has publicly stated his hope to complete legislation by August. This means that the current dollar stablecoins (such as Tether's USDT and Circle's USDC) that occupy 99% of the stablecoin market will be legally integrated into the global payment track, further consolidating US dollar hegemony and potentially stimulating demand for short-term US Treasury bonds. Official media Securities Times commented that if stablecoins are allowed to develop disorderly outside of regulation, it may bring negative impacts to China's financial system; however, abandoning this efficient settlement tool could miss an important opportunity for monetary internationalization. CCTV's Yuquan Tan Tian also criticized that the US is extending dollar hegemony to the global digital financial field through stablecoins, potentially eroding other countries' monetary sovereignty systems. Morgan Stanley's Chief Economist for China, Xing Ziqiang, predicts that Hong Kong will first promote stablecoins pegged to the US dollar and Hong Kong dollar to establish technological and market trust, and then promote CNH stablecoins. Supported by the offshore RMB capital pool of one trillion yuan in Hong Kong, CNH stablecoins can verify actual cross-border settlement application cases while avoiding violations of mainland capital controls or impacting domestic financial stability.