Chinese Economist Warns of US Dollar Stablecoin Dominance, Urges Digital Yuan Expansion
1min read A prominent Chinese economist has expressed apprehension regarding the increasing prevalence of US dollar-backed stablecoins in the global financial system. Zhang Ming, a senior economist, highlighted that the unregulated growth of these stablecoins could further entrench the US dollar's dominance in the international monetary system. He cautioned that if the US successfully integrates dollar-pegged stablecoins with global credit markets, it could intensify the dollar’s influence in both physical and digital economies, making it more difficult for other currencies to compete globally.
Zhang's concerns stem from the current market trends, where US dollar stablecoins such as Tether (USDT) and USD Coin (USDC) lead the stablecoin sector. These stablecoins are extensively used as trading pairs on cryptocurrency exchanges, providing liquidity and acting as intermediaries between fiat currencies and digital assets. In various developing economies, these assets are favored as digital stores of value, helping users maintain purchasing power in volatile economic conditions.
In light of these concerns, China is being urged to expedite the internationalization of its digital yuan (CNY). Zhang proposes that China should broaden the use of digital tokens on both domestic and international platforms, aligning sovereign credit with global application scenarios. He believes that with appropriate design and risk management, these efforts could enhance the renminbi’s global standing and counterbalance the rising influence of dollar-denominated stablecoins. The report underscores that expanding the use of digital tokens on these platforms can significantly bolster the international currency status of the renminbi, thereby more effectively addressing the challenges posed by US dollar stablecoins.
The warnings issued by Zhang echo similar concerns from other regions. Recently, officials have expressed fears that the US’s pro-crypto stance could give dollar-backed stablecoins an advantage over alternatives. This trend may jeopardize financial autonomy and the stability of other currencies. The dominance of US dollar stablecoins in crypto trading and decentralized finance (DeFi) highlights the necessity for other countries to develop their own digital currencies to preserve financial sovereignty and stability.
Ask Aime: What are the implications of US dollar-backed stablecoins spreading globally and how might this affect the renminbi's international standing?
