Wang Yongli, former Vice-President of the Bank of China: Why did China insist on stopping the stabilization coin

Prepared by:Wang Young-liFormer Vice-President, Bank of China

China ' s policy of accelerating the development of the digital renminbi and firmly curbing the virtual currency, including the stable currency, is well established. This is a combination of factors such as China’s mobile payments and the digital renminbi’s global lead, its sovereign security and the stability of its monetary and financial system。

since may 2025, the competition between the united states and hong kong for stabilization currency legislation leading to the global stabilization currency and encrypted assets (also known as “ encrypted currency ” or “ virtual currency ”) has culminated in the proliferation of institutions and capital for the issuance of stable currency and investments in encrypted assets, which has also given rise to much debate as to whether china should make every effort to promote the development of stable currency legislation and the renminbi, including offshore, and whether china should continue to move forward with the digital currency, following united states legislation prohibiting the federal reserve from issuing digital dollars。

For China, this involves the direction and path of national monetary development. In the context of the global spread of the dollar’s stable currency, the sharper complexity of international relations and increased competition for international currencies, the implications of innovative development of the renminbi and the preservation of national security, the strategic objectives of a strong monetary and financial power are enormous and far-reaching. It is important to analyse it calmly and accurately in order to ensure that early decisions are taken, without indifference or hesitation, or blindly engage in destabilizing errors。

Subsequently, the People's Bank of China announced thatWill optimize the positioning of the digital renminbi at the monetary level(REPOSITIONING M0 PRIOR TO DETERMINATION. THIS HAS BEEN REPEATED FROM THE VERY BEGINNINGWang Youngli Public No. 6 January 2021 & ldquo; the digital renminbi should not be located in M0”) to further optimize the system of managing the digital renminbi(To establish an international operating centre for the digital renminbi in Shanghai for cross-border cooperation and use; to establish an operating management centre for the digital renminbi in Beijing for the construction, operation and maintenance of the digital currency system)Promotion and acceleration of digital renminbi developmentI don't know。

On 28 November, 13 departments, including the People ' s Bank, jointly convened a meeting on coordination mechanisms for combating virtual currency trading, which indicated that, as a result of a number of factors, there had recently been a rise in virtual currency speculation, that related criminal activities had been taking place and that risk prevention and control were facing new challenges. It was emphasized that the units should deepen synergies and continue to maintain a ban on virtual currency and continue to combat illicit financial activities related to virtual currency。Clearly stable currency is a form of virtual currencyTheir distribution and trading activities are also illegal and counterproductive. This is a major setback for those who believe that China will contribute to the development of the renminbi and thereby liberalize the ban on virtual currency (encrypted assets) transactions。

This is whyChina's policy of accelerating the development of a digital renminbi and firmly curbing the virtual currency, including a stable currency, is well establishedI don't know. Of course, this policy orientation is still highly controversial at home and abroad, and there is no unity of understanding。

So, what is this major policy orientation of China

Here's an answer to China's insistence on stopping the stabilization currencyI don't know。

There is little space and opportunity to develop non-United States dollar stable currencies

Since 2014, Tether has introduced a US dollar-linked stable currency, USDTThe dollar-stabilized currency has been operating for more than 10 years and has developed an internationalized operating system that essentially occupies the entire market for encrypted assets, accounting for more than 99 per cent of the global currency-stabilized market value and volume of transactionsI don't know。

This situation is based, on the one hand, on the fact that the United States dollar is the central international currency with the highest global liquidity and the best operating system, and that the stable dollar-linked currency is most readily accepted globally. On the other hand, it is the result of the long-standing policy of tolerance with respect to encrypted assets such as United States Bitcoin and the dollar-stabilizing currency, rather than leading the international community to strengthen the necessary controls to safeguard the fundamental interests of all humanity. Even if the United States promotes legislation on securitized currencies and encrypted assets this year, it is more likely that it believes that dollar stability increases global demand for dollar assets, such as the US dollar and US Treasury debt, reduces the cost of financing for the US government and society, enhances the dollar’s international dominance, and makes choices to strengthen US support for the dollar and control its possible impact on the US, primarily in pursuit of maximizing domestic benefits, with little consideration given to the international risk of controlling the currency。

In the context of the strong push by the United States to stabilize the dollar, other countries or regions are expected to introduce non-United States dollar currencies, except where there may be some market space and opportunity within the scope of the legal currency sovereignty or on the power company ' s own platform, it is already difficult to counter the dollar at the international level, and development space and relevance are not significantI don't know. In the absence of strong ecological foundation and application support, the obvious characteristics of the dollar-stabilized currency and its orientation to traders and trade volumes, the output of inputs to the issuance of non-dollar-stabilized currencies is practically difficult to achieve and will be difficult to survive in the face of tighter national legislation and regulations。

There are still many problems and challenges in United States stabilization currency legislation

Following the success of President Trump’s second campaign, his brandished assets, such as bitcoin, were promoted to launch a new international boom in encrypted asset trading, to stabilize the dollar’s fast-growing currency trading and to stabilize its rapidly expanding market value. This has both increased the demand for the dollar and the United States Treasury debt, enhanced the international standing of the dollar, and brought significant benefits to the Trump family and its currency circle friends. But it also has a new impact on the global flow control of the dollar and the stability of the traditional financial system of the United States, while at the same time, it has become a major source of concernThe United States dollar-stable dollar-backed transfer of encrypted assets has also become a new and more vulnerable harvester for global wealth in the United States, posing a serious threat to monetary sovereignty and wealth security in other countriesI don't know。

That is why the United States has accelerated its legislation to stabilize the dollar, but its legislation is more in keeping with its priorities, pursuing the interests of the United States and even maximizing the interests of the group, at the expense of others and in the common interest of the world。

With the entry into force of the United States dollar stabilization currency legislation, it will be difficult to issue and operate the United States dollar stabilization currency in the United States without the approval of the United States regulatory bodies and the acquisition of licences (which is why Tether has announced that it will apply for USDT in the United States). Stable currency issuers subject to United States supervision must meet regulatory requirements such as certification of customers (KYC), anti-money-laundering (AML), counter-terrorism financing (FTC), be able to screen clients against government watch lists and report suspicious activities to regulatory bodies, and the system must have the function of freezing or intercepting a particular Stable currency when ordered by law enforcement agencies; issuing a Stable currency requires the possession of United States dollar assets (including monetary assets, short-term Treasury bonds, repurchase agreements for bonds, etc.) endorsed by regulatory bodies not less than 100 per cent as reserves, and the deposit of United States customer funds in banks in the United States may not be transferred abroad; interest or earnings paid on the Stable currency are prohibited, the excessive issuance of Stable currency and self-regulation are strictly controlled; reserve assets must be entrusted to an independent body recognized by the Supervisory Authority and audited and issued by audit bodies at least once a month. This will significantly enhance the stability of the value of the stable currency vis-à-vis the United States dollar, enhance the payment function and compliance of the stable currency and weaken its investment attributes and illegal use; and significantly increase the regulatory costs of the stable currency, with a corresponding reduction in its unregulated profitability。

United States stabilization currency legislation entered into force on 18 July, but many challenges remainAlthough the scope of reserve assets (bank deposits, short-term treasury debt, buy-back agreements supported by public debt, etc.) for the issuance of stable currencies is provided, since it mainly includes types of public debt with changing trade prices, even if the reserve assets are sufficient at the time of issuance, and if the price of the latter falls, there may be a shortage of reserves; if the reserve asset structure of the different issuers is not fully consistent and there is no central bank base, it means that the dollar-stable currency issued is not the same, and the arbitrage space will present a challenge to the relevant regulation and market stability; even if there is no excess in the issuance of a stable currency, it is equally likely to produce a stable currency if access to central finance (Defi) is allowed to invest in stable currency loans, unless it is entirely a combination of borrowing and not a free-standing arrangement; and it is not easy for a stable currency issuer outside the financial institution to meet regulatory requirements, which are in fact, and it is equally challenging to regulate。

more importantly, the first and most basic need for a stable currency is the settlement of the price of the 7x24-hour transaction of encrypted assets on the block chain。It is precisely because encrypted assets, such as bitcoin, do not satisfy the value of money as a measure of value and proof of value, that it is necessary to ensure that the total amount of money changes with the total value of tradable wealth that requires currency-denominated settlement, thus maintaining the fundamental requirement for the fundamental stability of the value of the currency, and that the price of its own relative currency fluctuates sharply(Therefore, there is a high risk of using encrypted assets such as bitcoin as collateral or strategic reserves)It is difficult to become a real currency in circulation to produce a stable currency linked to the legal equivalent(Therefore, bitcoin can only be encrypted assets called “ encrypted currency ” or ” virtual currency ” inaccurate; English “ Token ” translated “ coin ” or “ token ” also inappropriate, and should be translated directly into “ notary ” and clearly as an asset rather than a currency). The emergence and development of French currency stability, the introduction of statutory currency and more real-world assets (RWAs) into the chain, have strongly supported the trade and development of encrypted assets along the chain, serving as a link between the encrypted world and the real-world under the chain, and thus enhancing the integration and impact of encrypted world on the real world. This will significantly increase the scope, speed, scale and volatility of global wealth financial and financial transactions, and accelerate the transfer and accumulation of global wealth to a few countries or groups. In this caseWithout strengthening joint global controls on the placement and trading of securitized currency and encrypted assets, there are significant risks and risksI don't know. It is for this reason that the surge in the development of securitized and encrypted assets, strongly promoted by the United States Trump administration, is already characterized by enormous bubbles and potential risks that are unsustainable and require the utmost vigilance of the international community

Stable currency legislation could seriously undermine the Stable currency

AN OVERSTRETCHED CURRENCY LEGISLATION IS EXPECTED TO RESULT IN THE INTRODUCTION OF FRENCH CURRENCY STABILITY INTO LEGISLATIVE REGULATION, WHICH WILL INEVITABLY LEAD TO THE USE OF FRENCH CURRENCY TO STABILIZE TRANSACTIONS OF ENCRYPTED ASSETS, INCLUDING CHAINED ASSETS SUCH AS BITCOIN AND REAL WORLD ASSETS OPERATING IN CHAINS (RWA), WHICH WILL HAVE A PROFOUND IMPACT ON THE CURRENCY。

Until such time as encrypted assets are subject to legislative supervision and compliance protection, it is difficult for licensed financial institutions such as banks to be directly involved in activities related to the transactions, liquidation, trusteeship, etc. of encrypted assets, resulting in the transfer of opportunities to private organizations other than financial institutions. The lack of regulation, the lack of regulatory costs, the pre-existing stable currency issuer, the encrypted asset trading platform, etc. have become desirable high-profit organizations, and have had a growing impact on financial institutions such as banks and the financial system, forcing government or monetary authorities, such as the United States, to speed up legislation to stabilize the currency. However, once encrypted assets are protected by legislation and compliance, banks and other financial institutions will be fully involved, with direct facilitation by banks and payment agenciesfrench currency deposits run on a chain (deposit circulation or & ldquo; deposit monetization & rdquo;) which can be a complete substitute for a stable currency as a new gateway and hub linking the encrypted world to the real worldExisting exchanges of financial products such as stocks, bonds, monetary funds and ETFs can also facilitate more chained transactions of these relatively regulated financial products through RWA. Financial institutions, such as banks with adequate oversight, as the subject of chains and connections to the world of encryption and the real world, are more conducive to the implementation of the regulatory requirements of existing legislation for the stable currency and the implementation of all institutions & ldquo; the same business, equal regulation & rdquo; and the principle of reducing the impact and risks of the development of encrypted assets on the existing monetary and financial system。It's a dynamic that has emerged from the United States of America and is rapidly gaining groundI don't know。

As a result, the stabilization currency legislation may seriously reverse or destabilize the currencysee wang youngli public no. 3 september 2025, &ldquao; stabilization currency legislation could seriously undermine stability currency &rdquao;I don't know。

In such a situation, it is not really a reasonable option for countries to emulate the United States ' efforts to promote stable currency legislation and development。

China cannot follow America's path to stability

China already has the leading global position in terms of mobile payments and the digital renminbi, has no domestic advantage in promoting the renminbi, has little international space and influence, and should not follow the path of the dollar to stabilize the currency, and has made every effort to promote the development of the renminbi, both domestic and offshore。

More importantly, the use of encrypted assets such as bitcoin and stable currencies to achieve global, 7x24-hour transactions and liquidations, with significant efficiency gains, high levels of anonymity and high-frequency efficient global flows, lack of coordinated regulation by the international community, and difficulties in meeting regulatory requirements such askyC, AML and FTC, as well as the existence of clear risks and realistic cases of illicit activities such as money-laundering, fund-raising fraud, irregular cross-border transfers of funds, and the high level of possession of markets for encrypted asset transactions in the United States dollarThe United States has greater control or influence over major global block-linking systems, encrypted asset trading platforms and encrypted asset-dollar conversions(As evidenced by the ability of the United States to trace and freeze the secret asset accounts of some institutions and individuals, and the penalties and even the arrest of some encrypted asset trading platforms and their officials, it is difficult for China to challenge the international position of the dollar ' s stable currency and even to make it an accessory to the dollar ' s stable currency, with an impact on national tax revenue collection, foreign exchange management and cross-border financial flows, and a serious threat to the sovereign security of the renminbi and the stability of the monetary and financial system。In the face of a more acute and complex international situation, China should give prominence to its national security and exercise vigilance and vigilance over transactions involving encrypted assets, including stable currency, rather than simply pursuing efficiency gains and cost reductionsI don't know. There is a need to accelerate the improvement of relevant regulatory policies and legal frameworks, focus on priority links such as information flows and financial flows, strengthen information-sharing among relevant departments, further improve monitoring and tracking capabilities and severely combat criminal activities involving encrypted assets。

Of courseWhile firmly calling for a halt to the stabilization of the currency and combating virtual currency trading, there is a need to effectively accelerate the innovative development of the digital renminbi and its widespread domestic and international application, to create an international lead in the digital renminbi, to move beyond the digital currency towards China, and to actively explore a new international monetary and financial system with fair and reasonable securityI don't know。

Given the combination of the above-mentioned factors, it is not difficult to understand why China has chosen to firmly curb the virtual currency, including the stable currency, and to move forward and accelerate the development of the digital renminbi。