Exploring the Internal and External Combination Model of the Development of the Renminbi Stablecoin

Recently, the topic of stablecoins has attracted widespread attention. With the introduction of relevant regulatory policies, people have developed a strong interest in the development prospects of the RMB stablecoin.

Traditional views suggest that offshore RMB stablecoin trials should first be conducted in overseas markets, and once conditions are ripe, exploration can take place in domestic offshore markets such as free trade zones. However, considering the characteristics of stablecoins in the Web 3.0 era, we believe that a model of coordinated development between domestic and foreign markets can be adopted.

This linked development model has several advantages: first, it allows our country to actively respond to the rapid development of USD-backed stablecoins and participate in the formulation of global stablecoin regulations. Second, through the collaboration of domestic and foreign markets, it can better achieve economies of scale. Finally, this model helps central relevant departments play a leading role in the regulation of the RMB stablecoin while coordinating and cooperating with regulatory agencies in regions like Hong Kong.

Specifically, the innovation and exploration of the Renminbi stablecoin can be promoted simultaneously in the Shanghai Free Trade Zone and Hong Kong. For the onshore and offshore Renminbi stablecoin (CNYC), two models can be adopted: one is to establish a stablecoin issuance institution in the Shanghai Free Trade Zone by multiple parties; the other is to directly issue stablecoins through the existing digital Renminbi operating institutions at branches in the Free Trade Zone. Regardless of which model is adopted, it is necessary to ensure sufficient asset reserves, a sound risk management mechanism, and limit use to specific entities.

For offshore Renminbi stablecoin (CNHC), issuance institutions can be established in Hong Kong or domestic authorized institutions can be allowed to issue in Hong Kong. By establishing an exchange and interconnection mechanism between CNYC and CNHC, a dual Renminbi stablecoin system can be formed, which not only improves the efficiency of cross-border trade settlement but also strengthens Hong Kong's position in the internationalization of Renminbi.

In addition, regulatory authorities and issuing institutions need to strengthen cooperation and use intelligent technology to monitor the secondary market activities of stablecoins to prevent illegal capital flows. At the same time, the formulation of relevant laws and regulations should be accelerated to enhance their voice in the global stablecoin legal framework.

In the long run, we can draw on the "financial internet" concept proposed by the Bank for International Settlements to promote the synergistic development of the digital yuan, bank tokenized deposits, and stablecoins, achieving complementary win-win outcomes.