The trend has emerged, the Central Bank governor mentioned stablecoins.

The Central Bank governor mentioned stablecoins for the first time, and this signal is something you need to pay special attention to.

Today (June 18, 2025, Wednesday), at the Lujiazui Forum in Shanghai, Central Bank Governor Pan Gongsheng mentioned stablecoins for the first time.

Friends who are familiar with the Chinese financial system know that the Lujiazui Forum is an important occasion for the highest level of financial decision-making in China to voice itself externally once a year. On this significant occasion, the speech of the Central Bank governor requires us to carefully analyze its nuances.

In this speech by President Pan, I focused my attention on stablecoins.

"Emerging technologies such as blockchain and distributed ledger have promoted the vigorous development of central bank digital currencies and stablecoins, realizing 'payment as settlement', reshaping the traditional payment system from the bottom, greatly shortening the cross-border payment chain, and posing huge challenges to financial supervision." ”**

Although only a stablecoin was mentioned in passing, the significance of these three words coming from the Central Bank governor is just different.

Why talk about stablecoins?

Let's talk about the background of what Pan Gongsheng said.

President Pan first mentioned the international monetary system, pointing out that it is evolving from a dollar-dominated system to an era of healthy competition among a few strong sovereign currencies. The underlying implication is that the Renminbi will also play an important role in the future.

In fact, during the process of challenging the dominance of the US dollar, the euro has actually provided us with a particularly positive example.

The euro was born in 1999 and currently accounts for 20% of global foreign exchange reserves, which actually took less than 30 years.

I think that in addition to the strength of the European economy itself, it is also very important for the world to have an alternative to the US dollar.

With the development of the Chinese economy, this backup tire cannot only be the euro. In fact, the internationalization of the renminbi has been quite rapid in recent years.

Pan Gongsheng revealed that currently, the Renminbi has become the world's second-largest trade financing currency.

Note that the second largest trade finance currency is mentioned here, why is it called a trade finance currency?

This is not difficult to understand, as China's real trade settlement demand is very large as the world's factory, and the flow of goods and the flow of currency are closely integrated.

After discussing the international monetary system and its evolution, Pan Gongsheng immediately turned to the cross-border payment system. The underlying message is not difficult to understand: only with a strong global cross-border payment system can funds flow globally, and the internationalization of sovereign currencies can achieve faster and better development.

Over the past decade, the PBOC has been building a RMB internationalization system with Chinese banks, including offshore clearing banks and RMB cross-border payment systems.

After the emergence of stablecoins, the cross-border payment system is facing a new round of technological upgrades. The competition among countries for dominance in the global monetary system primarily revolves around providing a better user experience for currency users. With the existence of USD stablecoins and their gradually expanding usage, if we do not keep up with this new technology, the cross-border settlement experience of the RMB will lag behind that of the USD. Cross-border payment entities may abandon the use of RMB for payment settlements due to issues such as cost and efficiency.

Therefore, from the perspective of currency competition, if this thing can enhance the experience of using currency, we should also have what the United States has.

What is a stablecoin?

Next, let me explain in detail what a stablecoin is.

A stablecoin is actually a type of encrypted digital currency on the blockchain, but unlike ordinary cryptocurrencies, a stablecoin is pegged to an asset, usually a fiat currency (such as the US dollar or euro), precious metals (such as gold), or other assets, in order to achieve price stability.

Only a stable coin value can fulfill the function of a medium of exchange for currency. Clearly, this function cannot be borne by digital currencies like Bitcoin. Why? Because Bitcoin's value is highly volatile. You can't tolerate that something you want to buy today is worth $100,000, and tomorrow due to price fluctuations, it sells for $120,000.

So the next question is, since we have the US dollar, why do we still need a US dollar stablecoin that is pegged to the US dollar?

This is related to cost and efficiency.

For example, the traditional dollar system is like sending letters through the post office, requiring multiple transfer stations, taking time and incurring high fees, because the information about the flow of funds has to circulate within the banking system. Stablecoins, by using blockchain technology, are like sending information via email, arriving instantly and at a low cost.

If this example is still not so clear, then I will give another example around us, to know that the money in the RMB account cannot be directly transferred abroad, you need to do the exchange first, and then through the banking system, through the Swift message system, so that the transfer information can be exchanged between the banks in the Swift membership system. If you don't have a bank account, or your bank is not in the Swift system, there is no way to achieve this transfer, and as we all know, the threshold for bank transfer is significantly higher than that of Internet accounts.

Recently listed Circle, the company that focuses on stablecoin systems, saw its stock price soar after going public, and its current price-to-earnings ratio has exceeded 200 times.

As a global fintech company, Circle's main business is the issuance and management of the stablecoin USDC (USD Coin), a stablecoin pegged 1:1 to the US dollar.

In addition to the US dollar stablecoin, Circle has also issued the euro stablecoin and plans to launch the British pound stablecoin and the Japanese yen stablecoin in the future.

It is precisely because stablecoins have a broad market application prospect that companies providing stablecoin services will also possess enormous commercial value, which is also the reason the market has given this company a high valuation.

The Future of Stablecoins

So at this point, everyone may understand why President Pan mentioned stablecoins. The huge potential of stablecoins in the field of cross-border payments makes it something that any Central Bank governor eager to promote the internationalization of sovereign currency cannot underestimate.

Especially as China, a super-large economy relying on exports, manufacturing, and trade, opens up to the outside world, this massive economy's foundation is its openness. Foreign trade involves the flow of funds, and in this regard, if a stablecoin for the renminbi is launched, it will significantly reduce the cross-border settlement costs of the renminbi, benefiting both importers and exporters, while also accelerating the internationalization of the renminbi.

Recently, we have seen progress from the regulators.

On May 21, 2025, the Hong Kong Legislative Council passed the "Stablecoin Regulation Bill" in its third reading, marking Hong Kong as one of the first regions in the world to establish a comprehensive regulatory framework for stablecoins.

The regulation requires institutions issuing fiat-backed stablecoins (such as USD, HKD) in Hong Kong or globally issuing HKD-backed stablecoins to obtain a license from the Hong Kong Monetary Authority (HKMA).

Soon after, we immediately saw the news, including Ant International, Ant Technology, and JD.com are all applying.

Even Liu Qiangdong, who has not faced reporters for a long time, talked about stablecoins when communicating with reporters yesterday (June 17, 2025, Tuesday). He said that JD will actively apply for a stablecoin license and specifically mentioned that stablecoins will significantly reduce the costs of international settlements.

This indicates that the trend of stablecoins has resonated both domestically and internationally, forming a consensus among regulators and the industrial sector.

Finally, to add one more point, at the Lujiazui Forum, Pan Gongsheng also mentioned the issues of the global financial stability system and the governance of international financial organizations, but for ordinary people, I think nothing is more important than stablecoins.

President Pan's statement may hint that the Central Bank of China also has a top-level design for this and is preparing to make a significant move in the stablecoin space.