China makes a strong push for digital renminbi (e-CNY) to compete with American stablecoins.

China is intensifying efforts to promote the digital yuan (e-CNY) to challenge the dominance of dollar-pegged stablecoins in global trade.

According to a recent report from Chinese media, the Communist Party of China expressed concern over the increasing interest of the United States in stablecoins. The report published by the deputy director of the National Financial Development Laboratory (NFDL) warned that U.S. stablecoins could reshape the global financial market. Therefore, China needs to accelerate the adoption of central bank digital currency (CBDC) to compete fairly with U.S. stablecoins.

A payment terminal accepting eCNY in Shanghai, China | Photo: Bitcoin Magazine## Stablecoins are seen as a financial threat

The report classifies digital assets into three main groups: Bitcoin, stablecoins represented by USDT and USDC, and CBDCs represented by e-CNY. Accordingly, Bitcoin is not considered a true currency but rather a special financial asset with investment value. However, due to high price volatility, Bitcoin is viewed as a risky asset. Nevertheless, Bitcoin tends to move in the opposite direction to the US dollar exchange rate, leading some investors to see it as a hedge against the volatility of fiat currencies, particularly the US dollar.

Among the three types of assets, stablecoins are considered to have the strongest impact on the international financial system because they are backed by fiat currency and have similar financial characteristics. Specifically, stablecoins are supported by the dollar and benefit from its stability, helping them achieve a high level of acceptance among global investors. Currently, the market capitalization of stablecoins has exceeded 200 billion USD.

In light of this situation, Chinese leaders emphasized that it is time for the digital yuan to develop in order to keep up with the competition.

Expanding the Use of Digital Renminbi

China is the first country to launch a CBDC, but transactions are still primarily limited to the retail sector. The report emphasizes that in order to compete with US stablecoins, the digital yuan needs to expand its application beyond the consumer sector.

Specifically, the report proposes to expand the payment scope of e-CNY from M0 (cash) to M1 (cash and demand deposits) and even M2 (cash and total deposits) as soon as possible. This will help the digital yuan to be more widely accepted in both domestic and international markets.

In addition, the report also calls for China to develop its own stable digital currency while promoting the use of digital tokens on online platforms. Furthermore, it is necessary to ensure that e-CNY can integrate smoothly with global financial applications.

Europe is also seeking stablecoin solutions

Recently, the European Central Bank (ECB) also mentioned the necessity of a stablecoin for the euro. Chief Economist Phillip Lane stated in a speech that "the digital euro will provide a secure digital payment method, widely accepted under European governance, helping to reduce dependence on foreign providers."

He also mentioned that large technology corporations such as Apple Pay, Google Pay, and PayPal are dominating the digital payment market in Europe, threatening the financial independence of the region. This statement came right after a post by Michael Saylor, in which he declared: "EUR will need BTC."

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Thạch Sanh

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