Group 1 - The world is undergoing significant changes, and the international financial governance system is facing profound restructuring, with China playing a crucial role as the world's largest trading nation and foreign exchange reserve holder [1] - Accelerating the construction of a financial powerhouse is essential for achieving the great rejuvenation of the Chinese nation and adapting to the contemporary global financial landscape [1] Group 2 - The concept of a financial powerhouse is based on a strong economic foundation, leading global economic strength, technological capability, and comprehensive national power, along with six key financial elements [2] - The six key financial elements include a strong currency, a capable central bank, robust financial institutions, a significant international financial center, effective financial regulation, and a talented financial workforce [2] Group 3 - Building a financial powerhouse requires a strong real economy as its support, as a robust economic foundation ensures the stable operation of the financial system and drives financial innovation and development [3] - Historical examples, such as the UK's industrial revolution and the post-World War II U.S. economic dominance, illustrate how strong economic foundations can enhance a nation's financial credibility and governance [3] Group 4 - Financial development must return to serving the real economy, as the essence of finance is to support economic growth and prevent financial risks [4] - The 2008 financial crisis highlighted the dangers of financial institutions operating outside the fundamentals of the real economy, emphasizing the need for finance to support real economic development [4] Group 5 - High-quality financial services are essential for economic and social development, focusing on technology finance, green finance, inclusive finance, pension finance, and digital finance [5] - Financial resources should be allocated precisely to strategic emerging industries and advanced manufacturing to promote structural adjustment and new economic growth points [5] Group 6 - Developing a global high-efficiency financial market and cultivating internationally competitive financial institutions are core financial elements for building a financial powerhouse [6] - The financial system must address issues of uneven capital allocation and improve financing efficiency to better serve the real economy [7] Group 7 - Steadily promoting the internationalization of the Renminbi is crucial for enhancing China's position in the international monetary system and creating a favorable external environment for building a financial powerhouse [8] - The goal is to increase the use of the Renminbi in cross-border trade and attract international investors to participate in China's financial markets [8] Group 8 - Participating in and leading reforms of the international financial governance system is necessary for transitioning from being a rule taker to a rule maker in the global financial landscape [9] - The need for a more equitable, inclusive, and sustainable financial governance system is emphasized, along with the importance of reforming multilateral financial institutions [9]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report discusses the implications of stablecoins and the internationalization of the RMB, emphasizing the long-term strategies being implemented by the People's Bank of China (PBoC) to enhance the RMB's global presence [17][21] - It highlights the increasing dominance of USD-pegged stablecoins in the market, which has led to a rise in demand for US treasuries [23][24] Summary by Sections Stablecoins and RMB Internationalization - The PBoC is focusing on enhancing financial infrastructure and services in Shanghai to facilitate RMB internationalization [18] - New financial measures include promoting offshore RMB-denominated bond issuance and optimizing cross-border trade and investment [19] Market Dynamics - The stablecoin market is experiencing significant growth, with over USD 120 billion backed by US T-bills, indicating a strong reliance on USD [24] - The total transaction volume of stablecoins has been rising, with a notable increase compared to traditional payment systems like Visa and MasterCard [22] Regulatory Developments - The Hong Kong Stablecoins Bill is set to take effect on August 1, 2025, establishing a regulatory framework for stablecoin issuers [20] - The report outlines the licensing requirements and operational standards for stablecoin issuers in both Hong Kong and the US [20] RMB's Global Position - The share of RMB in global foreign exchange reserves has decreased from 2.84% in Q1 2022 to 2.18% in Q4 2024, indicating challenges in its international acceptance [31] - The establishment of a Digital Yuan International Operations Center in Shanghai aims to expand the RMB's global reach [29]

Investment Rating - The report does not explicitly provide an investment rating for the industry discussed Core Insights - China's interest in stablecoins is driven by concerns over US legislation that could reinforce dollar dominance, with the PBoC exploring Hong Kong as a testing ground for future payment alternatives [1][2] - The development of RMB stablecoins is seen as a potential building block for cross-border RMB settlement, but significant reforms are needed for true internationalization [10][12] Summary by Sections Stablecoins and RMB Internationalization - The US GENIUS Act's passage marks a pivotal moment for stablecoins, potentially transforming USD-pegged stablecoins into synthetic dollars, which could enhance demand for US Treasuries [2] - Stablecoins are viewed as distribution channels for existing currencies rather than new currencies, extending the US dollar's reach into crypto and emerging markets [3] PBoC's Strategy - The PBoC has shifted from banning cryptocurrencies to advocating for a multi-polar global currency system, emphasizing the need for efficient digital payment alternatives [4] - Digital RMB and stablecoins are proposed as viable options for cross-border transactions, addressing weaknesses in traditional payment systems [4] RMB Stablecoins: Opportunities and Challenges - Current cross-border digital RMB transactions are limited in scale, primarily utilizing Project mBridge, with only five central banks involved [5] - The potential for RMB stablecoins is hindered by domestic usage bans, capital controls, and the dominance of USD-pegged stablecoins [5] Hong Kong's Role - Hong Kong is the first jurisdiction to pass stablecoin legislation, effective August 1, 2025, which mandates 100% high-quality reserves for stablecoins [9] - The legislation aims to promote USD and HKD pegged stablecoins initially, with plans to introduce CNH pegged stablecoins later, leveraging Hong Kong's liquidity pool [9] Long-term Outlook for RMB Internationalization - Despite efforts to enhance cross-border settlement infrastructure, the RMB's share in global reserve currencies has declined from 2.8% in early 2022 to 2.2% by the end of 2024 [11][13] - Restoring global confidence in China's growth potential is crucial for increasing RMB usage, necessitating structural reforms in the economy [12]

Investment Rating - The report does not explicitly provide an investment rating for the industry or the RMB internationalization efforts Core Insights - The People's Bank of China (PBoC) is advocating for the internationalization of the RMB and a multipolar global financial system, emphasizing the need for securing international transactions over enjoying the benefits of a reserve currency [2][8] - Eight new financial policies have been announced to facilitate the opening of China's financial system and promote the use of RMB internationally [3][8] Summary by Sections PBoC's Remarks - PBoC Governor highlighted the tension between self-interest and global public goods, the spillover of domestic policy, and the weaponization of currency in geopolitical competition [2] - The focus is on securing cross-border settlements rather than the "exorbitant privilege" of a reserve currency [2] Financial Policies - The PBoC announced eight financial measures aimed at enhancing RMB internationalization, which include establishing a trade reporting system, setting up an international digital RMB operation center, and promoting RMB FX futures trading [5][6] - The measures also aim to enrich financial products and services in the Shanghai Free Trade Zone and enhance Shanghai's role as a financial center [6][8] Economic Context - The wider international use of RMB is contingent upon a robust economy and progress in capital account convertibility [3] - To restore global confidence in growth, Beijing needs to address deflation and increase the supply of central government bonds [3]