The trend has become a central bank governor mentioned stable currency

The central bank governor mentioned stablecoins for the first time. You need to pay special attention to this signal.

Today (Wednesday, June 18, 2025), at the Lujiazui Forum in Shanghai, central bank governor Pan Gongsheng mentioned stablecoins for the first time.

Friends familiar with China's financial system know that the Lujiazui Forum is an important venue for China's top financial decision-makers to speak out once a year. On this important occasion, the central bank governor's speech requires us to carefully savor it.

In Governor Pan's speech this time, I focused on stablecoins.

Pan Gongsheng's original words were,"Emerging technologies such as blockchain and distributed ledgers have promoted the vigorous development of central bank digital currencies and stablecoins, realizing 'payment is settlement', reshaping the traditional payment system from the bottom up, and significantly shortening the cross-border payment chain. At the same time, it has also posed huge challenges to financial supervision."

Although only one sentence about stablecoins was mentioned, these three words spoken by the central bank governor have different gold content.

Why talk about stablecoins?

Let's talk about the background of Pan Gongsheng's words.

Governor Pan first mentioned the international monetary system. He pointed out that the international monetary system is evolving from the dominance of the US dollar to an era of healthy competition among a few strong sovereign currencies.

The subtext is that the RMB will also play an important role in the future.

In fact, in the process of challenging the dominance of the US dollar, the euro actually gave us a particularly positive example.

It took less than 30 years for the euro to be born in 1999 and now account for 20% of global foreign exchange reserves.

I think in addition to the strength of the European economy itself, the world needs a backup besides the US dollar, which is also a very important reason.

With the development of China's economy, this backup cannot only be the euro. In fact, the pace of RMB internationalization has been very fast in recent years.

Pan Gongsheng revealed that at present, RMB has become the world's second largest trade financing currency.

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

This is not difficult to understand, because as a global factory, China's real trade settlement needs are very large, and the world of goods and the world of money are closely integrated.

After talking about the international monetary system and its evolution, Pan Gongsheng immediately talked about the cross-border payment system. The subtext here is not difficult to understand, that is, only with a strong cross-border payment system covering the world can funds flow around the world and the internationalization of sovereign currencies can develop faster and better.

Over the past decade, the central bank has been working with Chinese banks to build a system for the internationalization of the RMB, 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 between countries for the dominance of the global monetary system first requires a good user experience for using currency. Under the circumstance that the US dollar stablecoin already exists and gradually expands its scope of use, if we do not follow up on this new technology, then the cross-border settlement experience of the RMB will be inferior to that of the US dollar. Cross-border payment entities may give up using RMB for payment and settlement due to cost, efficiency and other issues.

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

What is a stablecoin?

Next, let's explain in detail what a stablecoin is.

Stablecoin is actually a kind of encrypted digital currency on the blockchain, but unlike ordinary cryptocurrencies, stablecoin is linked to an asset, usually linked to legal tender (such as the US dollar, the euro), precious metals (such as gold) or other assets, in order to achieve the stability of the currency value.

Only a stable currency value can play the role of a currency transaction medium. Obviously, this function cannot be undertaken by digital currencies like Bitcoin. Why? Because the value of Bitcoin is very volatile. You can't bear that the thing you want to buy today is worth 100,000 US dollars, but tomorrow it will be sold for 120,000 US dollars due to price fluctuations.

Then the next question is, since we already have the US dollar, why do we need a US dollar stablecoin pegged to the US dollar?

This is related to cost and efficiency.

For example, the traditional US dollar system is like sending a letter through the post office, which needs to go through multiple transfer stations, is time-consuming and has high fees, because the information of capital circulation must circulate in the banking system. Stable currencybecause it uses blockchain technology,is like sending information by email, which arrives instantly and at a low cost. If this example is still not clear, let me give you another example from our daily life. If you have transferred money abroad, you will know that the money in the RMB account cannot be directly transferred abroad. You need to exchange the currency first. After you have the US dollar, you can use the banking system and Swift's message system to exchange the transfer information between the banks in the Swift member system. If you do not have a bank account or your bank is not in the Swift system, this transfer cannot be realized. As we all know, the threshold for bank transfers is significantly higher than that for Internet accounts. Stablecoins can achieve that as long as you open an Internet account and purchase stablecoins with legal currency, you can complete the fund transfer efficiently, conveniently and at low cost through the blockchain.

Circle, a company that recently went public, is engaged in the stablecoin system. Its stock price soared after its listing, and its current price-earnings ratio has exceeded 200 times.

As a global financial technology company,

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

It is precisely because stablecoins have broad market application prospects that companies that provide stablecoin services will also have huge commercial value, which is why the market has given this company a very high valuation.

The prospects of stablecoins

So here, everyone may understand why Governor Pan mentioned stablecoins. The huge potential of stablecoins in the field of cross-border payments means that any central bank governor who is eager to promote the internationalization of sovereign currencies cannot underestimate its role.

Especially as a super-large economy based on exports, manufacturing and trade, China's opening up to the outside world is the foundation of this huge economy. Foreign trade involves the circulation of funds. In this regard, if the RMB stablecoin is launched, the cross-border settlement cost of the RMB will be greatly reduced, which is beneficial to import and export merchants and will also accelerate the internationalization of the RMB.

Recently, we have seen progress from the regulatory level.

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

The Ordinance requires that institutions that issue stablecoins pegged to fiat currencies (such as the US dollar and the Hong Kong dollar) in Hong Kong or issue stablecoins pegged to the Hong Kong dollar globally must obtain a license from the Hong Kong Monetary Authority (HKMA).

Then, we immediately saw news that Ant International, Ant Digits and JD.com were all applying.

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

This shows that the trend of stablecoins has resonated at home and abroad, and has formed a consensus among regulators and the industrial sector.

Finally, I would like to add that 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 none of them is as important as stablecoins.

President Pan's statement may imply that the People's Bank of China also has a top-level design for this and is also ready to play a big game on stablecoins.