Hong Kong authorities are exploring new designs for a central financial institution digital forex (CBDC), now proposing to situation a CBDC as a government-backed stablecoin.
Wu Jizhuang, a member of the Legislative Council of the Hong Kong Particular Administrative Area, believes that turning the Hong Kong Digital Greenback (e-HKD) right into a stablecoin will profit the adoption of latest applied sciences akin to Web3.
The choice of growing e-HKD right into a stablecoin has the potential to successfully tackle the dangers related to digital belongings in Web3, Wu Jizhuang mentioned in an interview with China Blockchain Information on January 5. In line with the legislator, such a design would assist Hong Kong digital greenback authorities achieve investor confidence within the Web3 trade and higher shield customers from issues akin to hacks.
“All stablecoins presently obtainable available in the market are issued by just a few personal corporations and aren’t topic to authorities supervision,” Wu Jizhuang mentioned, referring to the failure of many stablecoin initiatives in 2022.
The legislator additionally identified that the stablecoin may very well be linked to decentralized finance (DeFi) for higher entry to the Web3 ecosystem, stating:
“The Hong Kong authorities could think about whether or not the issuance of a digital Hong Kong greenback may very well be linked to decentralized finance and turn out to be an necessary infrastructure part of digital asset buying and selling platforms.”
Along with his position as a member of the Hong Kong Legislative Council, Wu Jizhuang can also be a founding member of G-Rocket, a startup accelerator that goals to draw 1,000 Web3 companies to arrange store within the city-state over the following three years. He co-founded G-Rocket in 2016 with Johnny Ng Package-Chong, a member of the Hong Kong Legislative Council.
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Wu Jizhuang is the most recent authorities official to focus on the potential advantages of mixing CBDCs and DeFi. Thomas Moser, a member of the governing board of the Swiss Nationwide Financial institution, mentioned in September 2022 {that a} CBDC may present extra stability to DeFi and cut back the dangers of its improvement.
Beforehand, Mikael Morch, govt director of digital asset hedge fund ARK36, advised that CBDCs shouldn’t be a competitor to non-public or decentralized cryptocurrencies. On the identical time, a CBDC may probably cut back the position of personal stablecoins, he mentioned.
