Stablecoins and US dollar hegemony: a complex game with an uncertain outcome

In today's global economic landscape, the hegemony of the US dollar has always been an important issue in the international financial field. With the rapid development of financial technology, the emergence of the emerging concept of stablecoins has added new variables to this issue. Can stablecoins strengthen the hegemony of the US dollar?

The answer to this question is not absolute, but full of complexity and uncertainty, and requires in-depth discussion from multiple angles. From the perspective of technology and market mechanisms, as a digital currency, the core value of stablecoins lies in achieving value stability by anchoring a certain asset or currency. The development potential of stablecoins based on legal tender depends largely on the status of the legal tender itself. If the legal tender itself is unstable, then even if a stablecoin is launched, it will be difficult to fundamentally change its weak position in the international monetary system.

As Dr. Zheng Lei pointed out, "Can the fiat currency, which is not strong enough, turn the tables by rushing to develop stablecoins? That is a daydream." Stablecoins cannot exist independently from the actual situation of their base currencies. Their success or failure is closely related to the credibility, stability and international recognition of fiat currencies. From the perspective of international competition, the formation of the hegemony of the US dollar as the world's dominant currency is the result of the long-term effect of multiple factors, including the strong economic strength of the United States, the depth and breadth of the financial market, and the widespread use of the US dollar in international trade and financial transactions.

The emergence of stablecoins, whether it is the US dollar stablecoin or the stablecoin of other currencies, may have a certain impact on the existing international monetary structure. However, whether this impact will lead to the strengthening or weakening of the US dollar hegemony depends on the interaction of multiple factors. On the one hand, if the US dollar stablecoin can be widely recognized and used globally, it may further consolidate the hegemony of the US dollar, because this will expand the scope of use and influence of the US dollar and enhance its dominance in the international financial system. On the other hand, if other countries or regions can launch competitive stablecoins and these stablecoins can gain a foothold in the international market, they may pose a challenge to the US dollar hegemony and weaken the monopoly of the US dollar.

From the perspective of China, China's development in the field of digital currency has always attracted much attention. China's choice to develop a digital RMB instead of simply launching a set of stablecoins reflects China's consideration of its own monetary system and financial stability. The promotion of the digital RMB aims to enhance the internationalization of the RMB and enhance the frequency and convenience of its use in international payments and settlements. At the same time, some Chinese financial technology companies, such as JD.com and Ant, are also exploring the feasibility of offshore RMB stablecoins.          However, the scale of offshore RMB is relatively small, and there is a large gap in its influence and market capacity compared with the US dollar stablecoin. Therefore, although the development of offshore RMB stablecoins has certain potential, it is difficult to pose a substantial threat to the US dollar hegemony in the short term. However, in the long run, with the continued growth of China's economy and the continuous advancement of RMB internationalization, the development of offshore RMB stablecoins may lay the foundation for the RMB to gain greater voice in the global financial system.

The relationship between stablecoins and the hegemony of the US dollar is not a simple linear causal relationship, but is affected by a combination of factors. The emergence of stablecoins has brought new opportunities and challenges to the international monetary system, but whether it can strengthen the hegemony of the US dollar still needs to be continuously observed and verified in practice. For each country, how to find a path suitable for itself in the development of stablecoins and enhance the international competitiveness of its own currency will be an important topic in the future financial field.