Digital RMB lacks legal authorization: a crucial step from pilot policies to legal framework

The cross-border use of digital renminbi requires legal support. Recently, Fan Wenzhong, Vice President of the Beijing Academy of Social Sciences, wrote in the Hong Kong Wen Wei Po that the current cross-border payments of digital renminbi mainly rely on internal regulations and pilot policies, lacking clear legal authorization. He suggested adding relevant provisions in the revision of the “People’s Bank of China Law” and establishing a systemic synergy with Hong Kong’s stablecoin regulatory framework. This reflects a real issue in the process of digital renminbi internationalization: policy innovation is ahead of legal development.

Current Legal Gaps

Pilot Policies vs. Legal Basis

The cross-border use of digital renminbi is currently in an awkward position. According to Fan Wenzhong’s analysis, existing cross-border applications are mainly based on:

• Internal regulations of the People’s Bank of China
• Local pilot policies
• International cooperation agreements

All of these are policy-level, not legal-level. This means that although cross-border payments of digital renminbi have been practically promoted, the legal framework remains unclear, which could restrict long-term and large-scale international use.

Why is this critical

The importance of clear legal authorization lies in providing a stable institutional foundation for the cross-border use of central bank digital currencies. Pilot policies can be flexibly adjusted but are also susceptible to policy changes. Once a legal framework is established, it can offer market participants greater expected stability and facilitate alignment with regulatory systems of other countries or regions.

Three Specific Recommendations

First Level: Clarify Central Bank Functions

Add provisions in the revision of the “People’s Bank of China Law” to specify the cross-border payment functions of digital renminbi. This transforms existing pilot practices into statutory responsibilities of the central bank.

Second Level: Legalization of International Interconnection

Clarify the legality of connecting digital renminbi with overseas compliant digital currency systems. This addresses technical legal issues—how central bank digital currencies interconnect across borders and how to ensure security and compliance.

Third Level: Hong Kong Stablecoin Integration

Strive to include in the detailed rules for the implementation of Hong Kong’s “Stablecoin Regulations” specific regulatory requirements and preferential policies for stablecoin issuers exchanging with mainland central bank digital currencies. This is an institutional innovation that protects consumers and financial stability while incentivizing institutions truly participating in the central bank digital currency system.

What Does This Mean

Institutional Upgrade for Digital Renminbi Internationalization

The shift from pilot policies to a legal framework indicates that the cross-border application of digital renminbi has moved from exploration to institutionalization. This is not just a legal document revision but a formal recognition and long-term commitment to this innovation.

Collaborative Innovation with Hong Kong

Fan Wenzhong’s proposal for “systemic synergy” is particularly interesting. It suggests that mainland China and Hong Kong are not acting separately but are coordinating at the legal framework level to create systemic conditions for the interconnection of digital renminbi and Hong Kong’s stablecoins. Considering Hong Kong’s advantages in fintech and international connections, this collaboration could accelerate the adoption and promotion of digital renminbi in the Asia-Pacific region.

Personal Opinion

This proposal reflects a mature policy approach: not rushing to push forward but first establishing a solid legal framework. Such an approach might make the internationalization process of digital renminbi appear somewhat slow, but in reality, it is laying a more solid foundation for large-scale application.

Summary

The transition of digital renminbi’s cross-border use from reliance on pilot policies to legal framework support marks an upgrade from “can do” to “how to do.” Fan Wenzhong’s suggestions address three key issues: the statutory responsibilities of the central bank, the legal interconnection of technical systems, and coordination with other regional regulatory systems. All point in the same direction—digital renminbi internationalization requires a more solid institutional foundation. The next focus is whether these suggestions will be incorporated into the revision of the “People’s Bank of China Law” and how Hong Kong’s stablecoin regulatory framework will align with these efforts.