Li Yang, a member of the Academy of Social Sciences: In the face of the stablecoin wave, China needs to advance on two tracks simultaneously

Li Yang, Academician of the Chinese Academy of Social Sciences and Chairman of the National Finance and Development Laboratory

CITIC Construction Investment Securities' 2025 Mid-term Capital Market Investment Summit opened on June 17, 2025, in Shanghai. Li Yang, Academician of the Chinese Academy of Social Sciences and Chairman of the National Finance and Development Laboratory, attended the main forum of the summit and delivered a keynote speech titled "Several Important Issues in Current China's Macroeconomy." Li Yang suggested that the development of stablecoins should be emphasized, and in the face of the stablecoin wave, China needs to advance on two tracks.

Li Yang: In the face of the stablecoin wave, China needs to advance on two tracks

Regarding the recent market discussions on stablecoin legislation, Li Yang pointed out that this situation reveals the key role stablecoins play in the contemporary international monetary and financial landscape, and their essence, impact, and relationship with sovereign currencies need to be clarified. The core value of stablecoins lies in their efficient payment and settlement functions; they are based on blockchain peer-to-peer payments, where payment equals settlement, offering significant advantages in payment efficiency and cost. This is the fundamental attribute of irreplaceable currency. Unlike cryptocurrencies like Bitcoin, which experience severe price volatility, stablecoins maintain value stability by anchoring to real assets (mainly U.S. dollar assets). Leading stablecoins, represented by USDT and USDC, have over 90% of their asset composition in short-term U.S. Treasury bonds and repurchase agreements. This mechanism makes stablecoins a bridge connecting the virtual currency world with the traditional fiat currency system, significantly enhancing cross-border payment efficiency and reducing costs.

Li Yang stated that the U.S. promotes stablecoin legislation with a clear legislative purpose to serve U.S. dollar interests: to modernize dollar payments, consolidate and strengthen the international status of the dollar, and create trillions of new demands for U.S. Treasury bonds. The stablecoin mechanism cleverly transforms the expansion of the crypto market into an extension of the dollar's influence on the blockchain.

Li Yang pointed out that in studying various self-proclaimed "currencies," one must always remember that "as long as sovereign states exist, the sovereign attribute of currency will not change. Currency sovereignty is an important component of national sovereignty, representing each country's highest authority to issue and manage its currency domestically, as well as its fundamental rights to independently implement its foreign monetary policy and participate equally in handling international monetary and financial affairs. Therefore, the introduction of various digital assets, including stablecoins, does not imply the emergence of a new international monetary system that 'transcends sovereignty.'

Thus, regardless of how stablecoins develop, when used for international payments, they cannot bypass the 'exchange' regulation between sovereign currencies." However, given that payment and settlement are the most basic functions of currency that cannot be replaced, "the stablecoin payment system continues to grow, and while it cannot create a new international currency, it effectively erodes the functions of existing sovereign currencies. This has a significant impact on the monetary systems of existing countries and even the international monetary system," Li Yang emphasized He believes that in the face of the wave of stablecoins, China needs to advance comprehensively on two fronts.

On one hand, "since any form of stablecoin cannot avoid the issue of monetary sovereignty, firmly promoting the internationalization of the Renminbi remains the core task of cultivating a strong currency (Renminbi). In this sense, all the efforts we have made in the past, including: expanding local currency swap agreements, promoting the Renminbi cross-border payment system, improving the global clearing service network for the Renminbi, and enhancing the use of the Renminbi in investment and trade in 'Belt and Road' countries should be steadfastly continued."

On the other hand, "it must be recognized that the trend of the integrated development of stablecoins, cryptocurrencies, and the traditional financial system will be difficult to reverse. Stablecoins and cryptocurrencies will achieve complementary development with central bank digital currencies, comprehensively improving payment efficiency and reducing payment costs, reconstructing the global payment system, and driving the development of decentralized finance (DeFi)." Li Yang specifically pointed out: "Although in recent years some countries only supported central bank digital currency experiments, and some countries focused on supporting the innovative development of stablecoins and cryptocurrencies, most have recently shifted to a model that supports the joint development of all three. The European Union, Japan, the UAE, Singapore, and Hong Kong are typical representatives of this integrated development." Of course, in promoting the development of stablecoins, "it is necessary to properly address issues such as the replacement of sovereign currencies, money laundering, user rights protection, and the loss of control over monetary policy."

Regarding further development paths, Li Yang believes: "We should fully utilize Hong Kong's favorable conditions, relying on its status as a financial center and existing institutional foundation (such as the USDT headquarters in Hong Kong), to develop offshore Renminbi stablecoins and build controllable international payment channels. That is, through offshore means, develop Renminbi stablecoins. In fact, in 2019, Tether, the world's largest stablecoin issuer, has already issued offshore Renminbi stablecoins, with a current circulation of over 20 million yuan." "Of course, we should also create conditions to actively and prudently develop Renminbi stablecoins, leveraging the status of Shanghai as an international financial center."

He pointed out that stablecoins are not new independent currencies; they are essentially a technological upgrade and extension of the dollar system in the digital age. Their rise highlights the core position of payment and clearing functions and the key role of the account system. Countries are competing to legislate and regulate stablecoins, attempting to control this key node that links the virtual and the real. For China, strengthening the economic fundamentals, solidifying the foundation of sovereign currency, effectively utilizing Hong Kong's offshore market to develop Renminbi stablecoins, and pragmatically promoting the internationalization of the Renminbi are fundamental ways to respond to changes and maintain monetary and financial security.

This article is sourced from: [CITIC Construction Investment Securities Research](https://mp.weixin.qq.com/s?__biz=MzI3ODAyODI0Ng==&mid=2649528521&idx=1&sn=9a3bf49336773c507195d5f1c0f5d6aa&chksm=f201227f844fd9f2c6744487e34e25027f410d154e5e6f7285b93802a4b4766bd36c585b5164&mpshare=1&scene=23&srcid=06191ckIhA9Bcy0WT9YaSjFz&sharer_shareinfo=481ae01d8f2bb3c4cd6a91e39b10ad47&sharer_shareinfo_first=481ae01d8f2bb3c4cd6a 91e39b10ad47#rd), Author: Li Yang, Member of the Chinese Academy of Social Sciences, Chairman of the National Financial and Development Laboratory, Original Title: "Li Yang: In the Face of the Stablecoin Wave, China Needs to Advance on Two Tracks"

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