Governments worldwide are actively developing and launching stablecoins to compete with dominant dollar-pegged digital fiat tokens.
This week marks the introduction of the first regulated stablecoin pegged to the offshore Chinese yuan (CNH), designed for international forex markets, alongside the launch of a South Korean won (KRW) stablecoin.
AnchorX, a financial technology firm, unveiled its AxCNH stablecoin pegged to the Chinese yuan at the Belt and Road Summit held in Hong Kong, as reported by Reuters. This launch follows China’s regulatory shift endorsing stablecoins for international trade.
The AxCNH stablecoin aims to streamline cross-border transactions with countries involved in China’s Belt and Road initiative, promoting infrastructure projects that connect China with the Middle East, Europe, and additional maritime routes.
In addition, BDACS, a digital asset infrastructure company, announced the release of KRW1, a Korean won-based stablecoin. Both KRW1 and AxCNH are overcollateralized, backed one-to-one by fiat deposits or government securities held by custodians.
Stablecoins are rapidly becoming strategically significant, as sovereign nations seek to digitize their fiat currencies to enhance international demand and mitigate inflation pressures caused by money printing.
Stablecoins, fiat currency, inflation, and government debt dynamics
Traditional financial systems remain slow and infrastructure-heavy, often inaccessible in developing regions, with currency controls limiting fiat demand.
By placing fiat on blockchain networks operating 24/7 with near-instant cross-border settlements, stablecoins increase accessibility and global demand, helping counter inflation-induced price increases.
Currency inflation occurs when demand fails to match the increased supply from money printing. Overcollateralized stablecoin issuers like Tether and Circle address this by holding government bonds and cash reserves, issuing digital tokens fully backed by these assets.
These issuers transform everyday users into indirect bond investors, expanding demand for government debt, lowering yields, and easing debt servicing costs for governments.
Tether has become one of the world’s largest holders of US Treasury bills, surpassing countries such as Canada, Norway, and Germany.
Anton Kobyakov, an advisor to Russian President Vladimir Putin, recently stated that the US government seeks to counterbalance its $37 trillion debt with stablecoins and gold to sustain confidence in the weakening US dollar.
Stablecoins are reshaping the digital economy, driving innovation in fiat currency usage worldwide. Stay informed with Coinstelegram for the latest updates on this transformative trend.
