China already has de facto stablecoins in the form of WeChat Pay and Alipay, a top economist at the country’s leading investment bank has argued – amid growing calls for Beijing to quickly adapt to the global rise of digital assets.
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“From an economic perspective, money based on third-party payment platforms functions much like stablecoins – and China holds a comparative advantage in this area, having already built a relatively mature regulatory framework,” said Peng Wensheng, chief economist at China International Capital Corporation, in a research note published on Friday.
Stablecoins are digital currencies pegged to fiat currencies like the US dollar or Hong Kong dollar, or to reserve assets such as gold. Unlike highly volatile cryptocurrencies such as bitcoin, they combine the speed and efficiency of crypto with the stability of traditional money.
According to Peng, platform-based digital money is an extension of legal tender, with safeguards in place to maintain a 1:1 peg with fiat currency.
“Its stability is underpinned by stricter safeguards – customer funds are backed by central bank base money, and regulatory oversight imposes tighter limits on its financial expansion,” he said.
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As stablecoins move to the forefront of global economic and financial debate, Chinese state media has urged policymakers to stay ahead of the curve.