Introduction
The rapid advancement of blockchain and distributed ledger technologies has catalyzed the growth of central bank digital currencies (CBDCs) and stablecoins, presenting both opportunities and regulatory challenges. With Hong Kong's Stablecoin Ordinance set to take effect on August 1, discussions around stablecoin adoption have reached unprecedented intensity.
This article proposes a synchronized development model for onshore (CNYC) and offshore (CNHC) RMB-backed stablecoins, emphasizing strategic coordination, proactive regulation, and scalability.
The Case for Dual Development
1. Financial Sovereignty & Proactive Regulation
- Challenge: The dominance of USD-collateralized stablecoins and evolving global regulations necessitate proactive RMB stablecoin strategies.
- Solution: Central authorities should lead regulatory frameworks, collaborating with Hong Kong counterparts to ensure alignment with monetary policies.
2. Scalability Limitations of Offshore Markets
- Issue: Hong Kong’s offshore RMB market may lack sufficient liquidity to achieve economies of scale under 1:1 reserve requirements.
- Approach: Integrate onshore liquidity pools (e.g., Shanghai Pilot Free Trade Zone) to bolster stability and adoption.
3. Regulatory Innovation
- Focus Areas: Identity verification, anti-money laundering (AML), and smart contract-based compliance.
- Collaboration: Cross-border partnerships to standardize oversight of issuance and secondary markets.
Onshore RMB Stablecoin (CNYC): Implementation Models
Model 1: Consortium-Based Issuance
- Key Players: Clearinghouses, commercial banks, payment providers, and investment firms.
Mechanism:
- Establish a Shanghai-based entity for chain issuance.
- Create a wholesale market for authorized institutions (e.g., digital RMB operators).
- Develop a retail market for qualified users.
Model 2: Bank-Led Digital RMB Integration
- Pathway: Leverage digital RMB operators’ branches in Shanghai to issue stablecoins.
Considerations:
- Differentiate from tokenized deposits.
- Address potential disintermediation risks via tech subsidiaries.
Requirements for Both Models
- Reserve Composition: High-liquidity assets (cash, short-term bonds) + fractional digital RMB.
- Compliance: Risk management, asset segregation, and scenario-based usage limits (e.g., FT account-style "e-fencing").
Offshore RMB Stablecoin (CNHC): Synergies with Hong Kong
Model 1: Joint Venture Issuance
- Structure: Cross-border entity in Hong Kong adhering to local laws.
Model 2: Branch-Based Issuance
- Process: Authorized mainland banks/payment firms use Hong Kong subsidiaries to issue CNHC.
Interoperability
- CNYC: Enhance cross-border trade efficiency.
- CNHC: Strengthen Hong Kong’s role in RMB国际化 (internationalization), support RWAs, and大宗商品 (commodity) transactions.
Regulatory & Technological Considerations
Collaborative Oversight
- Monitor secondary markets and non-qualified holders to prevent illicit flows.
Future Directions
- Align with BIS’s "Finternet" vision: Unify CBDCs, tokenized deposits, and stablecoins on a single ledger.
FAQs
1. Why combine onshore/offshore stablecoins?
- Ensures liquidity scalability and regulatory coherence while advancing RMB国际化.
2. How does CNYC differ from digital RMB?
- CNYC targets specific自贸区 (free trade zone) use cases; digital RMB is a CBDC for broader circulation.
3. What risks exist?
- Volatility from improper reserves or compliance gaps. Mitigated via strict oversight.
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