• Hong Kong is launching a stablecoin pegged to the region’s dollar in order to compete with the US dollar and other popular stablecoins.
• Four key individuals have been advocating for the issuance of HKDG (Hong Kong Dollar Government) in order to support and largely contribute to the digital economy.
• The advantages of HKDG include openness, stability, security, and cross border liquidity which will help facilitate financial innovations.
Hong Kong Launches Stablecoin
The government of Hong Kong is introducing a stablecoin pegged to its local currency – the Hong Kong dollar – as a way of competing with other popular stablecoins such as Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and TrueUSD (TUSD). This comes after numerous calls from financial innovators for the government to create a stablecoin that would be beneficial to the digital economy.
Advocates For HKDG
Four individuals have been actively advocating for this move: Wang Yang, vice president for institutional advancement at Hong Kong University of Science and Technology; Cai Wensheng, founder of smartphone software firm Meitu; Lei Zhibin, an honorary chair of the Hong Kong Blockchain Association; and Wen Yizhou, doctoral student who co-authored a paper proposing this solution.
Benefits Of HKDG
The proposed HKDG has several benefits including challenging US dollar dominance, providing liquidity for government projects, improving transaction efficiency by reducing costs and strengthening Hong Kong’s fintech capabilities. Furthermore, it provides opennesd, stability, security and cross-border liquidation capabilities which are expected to facilitate financial innovations.
Foreign Exchange Reserves
It was reported that as of March 2023 there were $430 billion worth of foreign exchange reserves in Hong Kong which is more than the combined market capitalization of USDT and USDC. Therefore having an HKDG backed by SAR [special administrative region]government can provide higher credibility and lower risk compared to private firms issuing their own version fo the coin.
Issuing a stablecoin pegged to the Hong Kong dollar will not only strengthen its leadership in blockchain sector but also propel progress towards achieving digital transformation while ensuring efficiency within the financial space.