China Prepares to Revise Central Bank Law as Legislators Push for Digital Yuan to Become Legal Tender

• Why Is China Revising Its Central Bank Law?
• Will the Digital Yuan Become Legal Tender in 2026?
• Hong Kong’s Strict Stablecoin Licensing: What’s the Plan?
• How Do Mainland China and Hong Kong Differ on Digital Currency?
• What’s Next for China’s Digital Currency Ambitions?
• FAQs

China is gearing up to overhaul its 2003 central bank law to accommodate modern financial technologies, with lawmakers like Fu Xiguo advocating for the digital yuan (e-CNY) to be formally recognized as legal tender. Meanwhile, Hong Kong is set to issue its first batch of stablecoin licenses, capping approvals at four firms. The moves highlight China’s dual-track approach to digital currency innovation—mainland China focusing on sovereign digital currency, while Hong Kong experiments with regulated stablecoins. Dive into the details below.

Why Is China Revising Its Central Bank Law?

During the 2026 National People’s Congress (NPC) sessions, Fu Xiguo, an NPC deputy and former head of the People’s Bank of China (PBoC) Liaoning branch, submitted a formal proposal to accelerate revisions to the PBoC Law. The current law, last updated in 2003, predates mobile payments and blockchain technology. Fu argues that the outdated framework fails to address the legal status of the digital yuan, which is already widely used in retail, transportation, and public services—albeit under administrative directives rather than national law. Legal recognition WOULD mandate universal acceptance of e-CNY, putting it on par with physical cash.

Will the Digital Yuan Become Legal Tender in 2026?

Fu’s proposal aligns with China’s 2023 Central Financial Work Conference, which called for a "modern central banking system." While the PBoC reports robust e-CNY adoption, its lack of formal legal status limits enforcement. For instance, businesses can currently refuse digital yuan payments without penalty. Legal tender status would close this gap, ensuring seamless integration into China’s economy. "In my view, this isn’t just about technology—it’s about sovereignty," remarked a BTCC market analyst. "China wants the e-CNY to function like cash, but with traceability."

Hong Kong’s Strict Stablecoin Licensing: What’s the Plan?

Hong Kong’s Monetary Authority (HKMA) plans to issue its first stablecoin licenses shortly after Beijing’s 2026 "Two Sessions." Of 36 applicants, only four are expected to secure approval in this initial round. Notably, RD Technologies—founded by ex-HKMA chief Norman Chan—participated in testing but may miss the cut. The cautious approach mirrors global concerns after high-profile stablecoin collapses like TerraUSD in 2022. "Hong Kong is walking a tightrope," said a TradingView commentator. "They want innovation but can’t ignore risks."

How Do Mainland China and Hong Kong Differ on Digital Currency?

Mainland China prioritizes its sovereign digital currency, while Hong Kong explores regulated stablecoins pegged to fiat. At the Two Sessions, Vice Premier Ding Xuexiang emphasized balancing growth ("the spear") with financial security ("the shield"). The HKMA’s strict licensing aims to prevent market volatility, ensuring Hong Kong’s stability impacts the broader national economy. "Think of it as a lab experiment," quipped a CoinMarketCap analyst. "Mainland China tests the e-CNY; Hong Kong stress-tests stablecoins."

What’s Next for China’s Digital Currency Ambitions?

With legal revisions and pilot expansions, China could cement the e-CNY’s role ahead of its 2035 digital economy goals. Hong Kong’s stablecoin framework may also set regional precedents. However, challenges remain—public adoption lags behind government targets, and global skepticism persists. "The tech is ready," admitted a PBoC insider. "Now we need hearts and minds."

FAQs

Is the digital yuan already legal tender?

No. While widely used, the e-CNY lacks formal legal status. Fu Xiguo’s 2026 proposal seeks to change this.

How many stablecoin licenses will Hong Kong issue?

The HKMA will approve "no more than four" licenses initially, with 36 firms competing.

Why revise the PBoC Law now?

The 2003 law doesn’t cover digital currencies. Updates would legitimize the e-CNY and modernize financial oversight.