According to people familiar with the matter, the State Council — China’s cabinet — will later this month review a comprehensive roadmap designed to expand the global use of the yuan. The plan is expected to set targets for international adoption, outline regulatory responsibilities, and provide guidelines for risk prevention. Senior leaders are also scheduled to convene a study session focused on stablecoins and the future of the yuan, with policy signals likely to emerge from those discussions.
Stablecoins, which are cryptocurrencies pegged to traditional currencies such as the U.S. dollar, have become key instruments for instant, low-cost global transactions. So far, dollar-backed stablecoins dominate the market, accounting for more than 99% of supply, according to the Bank for International Settlements. China’s exploration of a yuan-based counterpart underscores its ambition to reduce reliance on the dollar and establish a firmer footing in international finance.
Officials familiar with the deliberations say Hong Kong and Shanghai are expected to spearhead pilot programmes. Hong Kong already enacted a landmark stablecoin ordinance this month, placing it among the first jurisdictions to regulate fiat-backed issuers, while Shanghai is building an international operations hub for the digital yuan. Discussions on extending yuan and stablecoin use in cross-border trade are also planned for the Shanghai Cooperation Organisation (SCO) summit in Tianjin from August 31 to September 1.
Still, hurdles remain. Analysts note that China’s strict capital controls and large trade surpluses continue to constrain the yuan’s role as a free-floating global currency. Those same restrictions could complicate the rollout of yuan stablecoins, even as Beijing signals its readiness to experiment.
The stakes are high. The yuan’s share in global payments slipped to 2.88% in June — its lowest in two years — compared to the U.S. dollar’s commanding 47.19%, according to SWIFT. Meanwhile, Washington is moving quickly to legitimise dollar-pegged cryptocurrencies, with President Donald Trump throwing his weight behind stablecoins earlier this year.
Beijing views stablecoins as both a financial innovation and a geopolitical necessity. With U.S.-backed tokens increasingly used by Chinese exporters, regulators appear determined to develop homegrown alternatives that can capture market share. A PBOC advisor recently suggested that an offshore yuan stablecoin based in Hong Kong is “a possibility.”
Global markets will be watching closely. Though still relatively small at about $247 billion, the stablecoin market could reach $2 trillion by 2028, according to Standard Chartered Bank. China’s entry into the space could reshape both the technology and the politics of international payments.
The State Council’s final decision is expected in the coming weeks, potentially setting the stage for a major shift in the global financial landscape.