The People's Bank of China (PBoC) has recently announced the launch of the Digital RMB International Operations Center in Shanghai. PBoC Vice Governor Lu Lei stated that the upgrade and evolution of the currency and payment systems in the digital age is an inevitable historical trend, and that the Chinese central bank is exploring innovations in asset digitization that enhance regulatory efficiency and transparency, as well as the intelligent flow of value in settlement systems.
In July, during the Lujiazui Forum, PBoC Governor Pan Gongsheng revealed the information regarding the establishment of the Digital RMB International Operations Center in Shanghai. Two months later, the center became operational. This move is significant not only because it marks a deeper push for the internationalization of the RMB but also as a major step in the central bank's efforts to respond to the global trend of digital currencies with a sovereign digital currency. According to researchers at ANBOUND, this event signifies that the development of the Digital RMB has entered a new phase, transitioning from domestic retail promotion to cross-border payments and digital asset exploration. Meanwhile, as stablecoins gain increasing recognition and acceptance, the Digital RMB, as a sovereign currency, positions itself through this platform as a "competing alternative" to stablecoins.
It has been revealed that the center comprises three major platforms: the Cross-Border Digital RMB Payment Platform, the Digital RMB Blockchain Service Platform, and the Digital Asset Platform. The Cross-Border Digital Payment Platform is designed to support the internationalization of the RMB and its use in cross-border transactions, aiming to address the pain points in traditional cross-border payments through the use of legal digital currencies. The Blockchain Service Platform is focused on supporting standardized blockchain transaction switching and on-chain Digital RMB payment services. The Digital Asset Platform is designed to support the on-chain issuance, registration, custody, and compliant trading of digital assets. Among these, the Digital RMB Blockchain Service Platform and the Digital Asset Platform are built on the same blockchain infrastructure, enabling the two platforms to work in tandem. This setup supports the delivery versus payment (DvP) settlement of securities and funds on a unified ledger, exploring feasible pathways to enhance the quality and efficiency of financial services and reduce settlement risks within the existing regulatory framework.
From the relationship between these three platforms and their target services, it is clear that they not only include cross-border RMB payments but also cover digital asset transactions based on blockchain technology, hinting at attempts involving real-world assets (RWAs). These are also focal points for the enormous market potential surrounding stablecoins. Through these initiatives, the PBoC is taking the Digital RMB to a higher level. On one hand, it continues to defend monetary sovereignty through policy; on the other hand, it competes with stablecoins for market share through new platforms.
In terms of the promotion of Digital RMB, although it has indeed maintained relatively rapid growth in the retail sector, its transaction volume still lags far behind both banks and mobile payment platforms. In contrast to the rapid iteration of payment systems by Alipay and Tencent, the promotion of Digital RMB has yet to drive an evolution of traditional currencies. At the same time, in wholesale and asset transaction sectors, while there are ongoing new efforts to push forward innovations like collateralization and lending models, the overall progress is still far behind the widespread application of overseas stablecoins. This may be one reason why the central bank is eager to catch up, especially with stablecoins on the brink of making significant inroads into the market.
Researchers at ANBOUND pointed out that stablecoins have the inherent flaw of the "impossible trinity", which places immense pressure on their adoption within sovereign nations. This gives Digital RMB a competitive advantage domestically. For this reason, ANBOUND has recommended accelerating the development and application of Digital RMB within China. The establishment of the Cross-Border Digital RMB Operations Center marks a new phase, signaling that Digital RMB will also begin to compete with stablecoins in the cross-border arena.
Looking at the three platforms, it seems that the primary role of the Digital RMB International Operations Center is to promote cross-border RMB transactions. Among these, cross-border RMB payments are likely the center's most important business. In July, PBoC Governor Pan acknowledged the role of stablecoins, which was seen as a signal that China may be considering the acceptance of stablecoins. During this discussion, Pan particularly highlighted the positive role of blockchain technology in cross-border payments. He stated that emerging technologies such as blockchain and distributed ledgers have driven the development of central bank digital currencies (CBDCs) and stablecoins, enabling "payment and settlement" to occur simultaneously, fundamentally reshaping the traditional payment system and significantly shortening the cross-border payment chain. From this perspective, he effectively positioned the Digital RMB alongside stablecoins in the payment sector. Currently, by introducing Digital RMB into the cross-border payment platform, the central bank signals that it is unwilling to forgo this area where blockchain technology has the greatest potential for implementation, actively pushing for the use of Digital RMB in cross-border payments.
The establishment of the Digital RMB Cross-Border Payment Platform, coupled with the rapid growth of overseas U.S. dollar-backed stablecoins, suggests that the two may soon face direct competition. In reality, this competition is not only a technological battle within the broader "currency war" between the RMB and the U.S. dollar, but also a competition between the U.S.-led digital currency development route, centered on stablecoins, and China’s sovereign digital currency strategy. Given the underlying blockchain technology's shared foundation, this competition is essentially a continuation of the geopolitical rivalry between the U.S. and China in the digital domain. In this context, the Chinese central bank’s creation of a new platform appears to be more of a "proactive defense" stance.
Given the immense power of both the U.S. and China, it is difficult to predict the outcome of this competition, which is more of geopolitical influence. Given the dollar's continued dominance in international trade, it will likely leverage this influence in the digital realm. Regarding the internationalization of the RMB, the establishment of this new platform is limited to cross-border RMB transactions. While this carries the added weight of sovereign credit, the scope and market potential are significantly smaller than those of dollar-dominated stablecoins. This requires not only RMB acceptance but also the acceptance of the digital RMB. In this regard, the U.S. dollar enjoys wider acceptance. Of course, stablecoins face inherent weaknesses in terms of trust and stability, which may present an opportunity for the digital RMB to compete head-to-head.
Prior to this, Mainland China had collaborated with regions such as Hong Kong, Thailand, Singapore, and others to build a "digital currency bridge" under the auspices of the Bank for International Settlements (BIS), aiming to promote cross-border settlement of digital sovereign currencies between countries. However, there are clear challenges: under centralized systems, differences in infrastructure and legal foundations across countries have made cross-border settlement of sovereign currencies more difficult. These issues have been evident in the practical implementation of the "digital currency bridge". In contrast, the rapid development of stablecoin applications highlights the competitive advantage that decentralized cross-border currency transactions still hold.
Hong Kong's approach to stablecoins can be seen as another attempt by China in the digital currency space. Currently, Hong Kong is also building a "stablecoin + RWA" digital financial system, indicating that the focus of stablecoins is no longer just on cross-border payments but also on the digital transformation of financial markets. In contrast, the "Digital RMB + RWA" framework at the Digital RMB International Operations Center is only just being established and launched, meaning it has already fallen behind. Of course, the development of such new systems is closely tied to the maturity of the financial market, and in this regard, China still has a long way to go. Whether it is the Digital RMB or the tokenized stablecoin, their financial deepening and disintermediation bring even greater challenges to China's financial regulation and social governance, and these issues must be approached with caution. Due to the decentralized nature of stablecoins' cross-border flow, attempts to implement them domestically in the country need to be handled with particular care.
However, this does not mean that China should refrain from developing stablecoins. Researchers at ANBOUND have previously cautioned that even if China persists in pursuing its sovereign digital currency path, it should not abandon attempts to explore the development of stablecoins. This "dual-track" approach suggests that not only does the RMB need an open form of currency, but external trade and investment also require openness. The internationalization of the RMB should not solely aim to create a self-sustaining, closed system. ANBOUND's founder Kung Chan has pointed out that China should avoid the contradiction of superficial prosperity coupled with internal isolation. In this sense, the competition between sovereign digital currencies and stablecoins should be seen as a technological competition attempting at financial innovation without possessing other connotations.
Final analysis conclusion:
The launch of the Digital RMB International Operations Center marks the establishment of a cross-border financial infrastructure system for Digital RMB. Among its three main platforms, the most significant is the cross-border payment platform. This indicates that Digital RMB is aiming to compete with the currently popular tokenized stablecoins in the cross-border payment sector. This competition should be viewed as different attempts at financial innovation. The most crucial part of utilizing digital currency to promote the internationalization of the RMB is to create an open and inclusive platform.
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Dr. Wei Hongxu is a Senior Economist of China Macro-Economy Research Center at ANBOUND, an independent think tank.
