Bitcoin Global News (BGN)

October 10, 2018 -- ADVFN Crypto NewsWire -- This year has truly been the year of the Stablecoin. Before 2018, it truly seemed that most people in the Cryptocurrency space could only think of Tether when Stablecoins were brought up.

Now, the niche has ballooned, to say the least. From MakerDAI to Gemini Dollar and beyond, we have just about everything, or so we thought. Now, the news broke yesterday that the People’s Bank of China is considering the equivalent of a Yuán coin.

At this point, you are probably thinking: okay, what exactly do you mean by a Yuán coin?

The answer, in fact, is quite simple. Think about what Stablecoins are, in terms of their most basic definition.

Inside of that lies the fact that they have to be pegged to something, which is considered to be much more stable than they are. In most cases, as this niche has evolved, this has turned out to be the US dollar. Because this is true, one could argue that it was only a matter of time before someone attempted a Stablecoin that was backed by another country’s currency.

In the case of our previously mentioned Yuán coin, this means, of course, the Chinese renminbi or Yuán.

If you have any sort of background in financial markets, especially in foreign currency trading, then you might find yourself wondering: wait, why would the Yuán be considered to be a stable currency, given its general reputation? If you do fall into this party, then your concerns would not at all be off-base.

A simple Google search unearths a multitude of reports dating back years that indicate the currency’s unstable nature. One particular report speculates that this year, the currency’s status has worsened due to the United State’s tariffs on Chinese goods.

With all of this in mind, enter again Yuán coin. Due to the fact that this situation has worsened, a strong case could be made that the People’s Bank of China’s research into Stablecoins represents at least, a strong part of the government’s response to its falling currency.

The general idea is that with a Stablecoin backed to Chinese currency, China will be able to rival similar projects backed up by the US dollar as well as keep the future of traditional banking secure, which is all backed up by the original news referenced above.

With all of this in mind, the possibility also exists that if China were to rush out such a project, their efforts just might be in vain because of their currency’s shaky status. This, however, does not appear to be a significant risk as the same article as well as Coindesk’s piece on the subject indicate the Chinese government’s willingness to bide its time and proceed with caution.

In the end, we will not really know what will come of any of this until the Yuán coin hits the market, but it is reasonable expect any of these efforts to continue to fuel the ongoing battle between the United States and China for world supremacy.

By: BGN Editorial Staff