Beijing’s digital currency ambitions are unlikely to unlock the full potential of the yuan’s internationalisation, analysts say
China’s central bank could use Hong Kong as a sandbox for testing digital payment alternatives to internationalise the yuan, but Beijing’s digital currency ambitions face hurdles because of the country’s economic challenges, according to Morgan Stanley.
Hong Kong has established the world’s first regulatory regime for stablecoins – digital tokens that are pegged to a reference asset like a fiat currency – with the law taking effect from August 1.
The move positioned Hong Kong as a launch pad for yuan-pegged stablecoins, which could be used as a pilot for real-world cross-border settlement and offered a way to expand the use of the digital yuan internationally, Morgan Stanley analysts led by chief China economist Robin Xing said in a report last week.
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