Core Viewpoint - Stablecoins have the potential to become a new type of financial infrastructure, bridging the gap between the crypto world and traditional finance, and their development should be strategically considered by China [2][3]. Group 1: What are Stablecoins? - Stablecoins are defined as "the most decentralized among centralized assets and the most centralized among decentralized assets," highlighting their dual nature of being rooted in blockchain technology while also requiring regulatory oversight [3][7]. - They are linked to fiat currencies, which means they must comply with traditional financial regulations, thus acting as a bridge between the crypto and real worlds [3][8]. - The potential applications of stablecoins include cross-border payments, asset preservation, and integration into decentralized finance (DeFi) ecosystems [3][22]. Group 2: Impact on Financial Markets - Stablecoins can enhance payment efficiency, offering low-cost and fast transactions, particularly beneficial for cross-border payments [38]. - They can improve financial inclusivity, especially in high-inflation economies, by providing a means for asset preservation [41][42]. - However, stablecoins may pose risks to monetary stability and sovereignty in countries with weak financial systems, potentially undermining local currencies and monetary policies [45][46]. Group 3: Influence on International Monetary System - Stablecoins depend on the credit of fiat currencies, primarily the US dollar, and their rise could reshape global capital flows and the international monetary system [54][56]. - They may create new demand in regions with weak financial infrastructure, acting as a substitute for traditional banking systems [55]. - The emergence of stablecoins could challenge the dominance of the US dollar, as they provide alternative payment channels and may facilitate the rise of non-US currencies [56]. Group 4: China's Participation in Stablecoin Development - China should consider issuing offshore RMB stablecoins as a priority to participate in the development of stablecoins, leveraging its position as a major global trade player [5][57]. - The development of stablecoins could enhance China's financial resilience and flexibility in international trade, providing alternatives to traditional payment methods [57]. - However, the potential for stablecoins to bypass capital controls poses significant regulatory challenges for China [4][57].