BREAKING: China Moves to Revise Central Bank Law as Lawmakers Push to Make Digital Yuan Legal Tender

China is accelerating its digital currency revolution as regulators push for urgent revisions to the People’s Bank of China Law, declaring the 2003 legislation obsolete in the face of modern financial technology. In a landmark move during the 2026 National People's Congress sessions, deputy Fu Xiguo formally requested the digital yuan be officially designated as legal tender, signaling a seismic shift in the nation's monetary framework. Concurrently, Hong Kong is poised to issue its first batch of stablecoin licenses to a select group of no more than four companies, showcasing a dual-track strategy where mainland China and its special administrative region tackle the future of fiat-linked digital currencies from complementary angles.

Will China officially make the digital yuan legal tender?

During the 2026 National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) sessions, Fu Xiguo, a deputy to the NPC and former head of the People’s Bank of China (PBoC) Liaoning branch, submitted a formal request to speed up the revision of the Law of the People’s Bank of the People’s Republic of China. 

The current law was last revised in 2003. Fu Xiguo’s argument is that the 2003 law cannot address the needs of the modern economy. 

In 2003, mobile payments and blockchain technology did not exist in the public sphere. The deputy pointed out that the current legal framework does not clearly define the digital yuan as legal tender. 

Making the e-CNY legal tender by law would ensure that all individuals and businesses will accept it for payments, just like physical banknotes and coins.

During the 2023 Central Financial Work Conference, building a modern central banking system was proposed. Official data from the PBoC shows that the digital yuan is already being used in various sectors, including retail, transportation, and government services. However, its use has largely relied on administrative orders and pilot programs rather than formal national law. 

Hong Kong’s strict stablecoin licensing

Recent reports state that the Hong Kong Monetary Authority (HKMA) plans to release the first batch of stablecoin licenses shortly after the 2026 Two Sessions in Beijing. The HKMA received applications from 36 different institutions, but sources indicate that the first batch of licenses will be very small, likely fewer than four.

RD Technologies, former HKMA Chief Executive Norman Chan Tak-lam’s firm, was part of the testing process, but it may not be included in this very first batch of licensees. 

During the Two Sessions, Ding Xuexiang, Vice Premier of the State Council in charge of Hong Kong and Macao affairs, met with delegates to discuss the city’s role. He specifically mentioned that emerging industries like virtual assets and artificial intelligence (AI) are developing rapidly. 

These technologies usher in financial development, but they also present significant risks to financial security. 

Ding Xuexiang, using a metaphor of the spear and shield, suggested that the government must use technology for growth (the spear) while simultaneously building defenses (the shield) to protect the economy.

Hong Kong’s financial security directly impacts the financial stability of the entire country. By limiting the number of stablecoin licenses, the HKMA ensures that it can closely monitor each issuer and prevent the kind of market volatility seen in global stablecoin crashes in previous years.

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