Key Takeaways:
The proposal outlines a phased rollout starting in Hong Kong, citing its regulatory readiness and digital finance infrastructure. The authors say stablecoins can improve cross-border transaction speed, lower costs, and avoid interference with monetary policy. Tether’s existing CNY-denominated stablecoins are mentioned as early proof of technical feasibility and limited demand.Developing an offshore yuan-backed stablecoin could help expand the currency’s international use without compromising domestic monetary controls, according to a commentary published by China Economic Times on June 10 and authored by Shen Jianguang and Zhu Taihui of JD Group.
The article argues that issuing a CNY stablecoin outside mainland China, beginning with Hong Kong, would support the currency’s presence in global trade and finance while avoiding direct conflict with existing capital controls.
Hong Kong Seen as Launchpad for Expanding CNY’s Global Use
The authors describe the approach as a practical response to the growing dominance of U.S. dollar-backed stablecoins in international transactions.
“Offshore CNY stablecoins are a tool for supporting cross-border trade settlements and financial services, without interfering with domestic monetary policy,” the commentary states.
Hong Kong is seen as the most viable launch site due to its regulatory environment and digital finance infrastructure. The authors recommend a phased rollout strategy, starting in Hong Kong and expanding to other free-trade zones such as the Shanghai FTZ and Hainan.
The commentary emphasizes that unlike volatile crypto assets, stablecoins can facilitate 24/7 settlement, lower remittance costs, and offer transparency through blockchain rails.
It cites the World Bank’s estimate that traditional cross-border remittances average five days and cost over 6%, while stablecoin transfers can occur instantly and for a fraction of a cent.
“Delays and manual intervention in current fund transfer systems limit yuan’s usability abroad,” the authors wrote. “Stablecoins offer a parallel track that enhances efficiency and expands usage.”
Offshore Stablecoin Could Extend Yuan’s Reach
The article also responds to concerns about monetary leakage or policy dilution, suggesting that technical restrictions can prevent domestic circulation. Regulatory measures, including the travel rule, AML compliance, and large transaction screening, are described as sufficient for managing risks.
Tether’s issuance of CNY-denominated stablecoins totaling over 20 million yuan (~ US$2.8 million) is cited as evidence that offshore yuan digital assets are technically viable and already in limited use.
Shen and Zhu also suggest that a public-private issuance model could further support adoption, especially for trade settlement and fund investments. Shen is the chief economist of JD Group, while Zhu is the senior research director.
Offshore stablecoins could also offer China an alternative financial channel in a dollar-dominated system, especially in regions facing dollar access constraints. This would give Chinese institutions more control over bilateral trade flows without relying on U.S.-led infrastructure.
Still, scaling such a system would require international regulatory alignment. Without clear legal frameworks and credible reserve structures, CNY stablecoins risk being viewed as policy tools rather than reliable instruments of settlement.
Frequently Asked Questions (FAQs)
Offshore CNY stablecoins could function alongside central bank digital currencies by covering use cases where full central bank backing isn’t necessary while offering more flexibility in cross-border environments where CBDCs are not yet interoperable.
By allowing direct digital settlement between trading partners, offshore stablecoins could bypass traditional messaging and clearing systems, reducing exposure to sanctions and geopolitical friction.
Cross-chain interoperability, on-chain compliance enforcement, and liquidity management across jurisdictions remain unresolved.
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