According to TKWW, key players such as HKUST Vice-President advise that the Hong Kong government create its own stablecoin, dubbed HKDG, as a strategic move to strengthen the city’s digital economy.
The Hong Kong SAR government’s continued promotion and adoption of digital assets places it ahead of countries or regions such as the United States and Singapore. In this scenario, stablecoins, which bridge the gap between traditional finance and the digital economy, are becoming increasingly significant. Issuing a stablecoin connected to the Hong Kong dollar could greatly improve transaction efficiency, lower costs, and expand the region’s fintech skills.
However, industry insiders view the government’s present attitude of encouraging private institutions to create Hong Kong dollar stablecoins as excessively restrictive. This technique may result in stablecoins with minor market influence, as evidenced by Singapore’s XSGD.
According to the experts, a Hong Kong dollar stablecoin backed by the city’s foreign exchange reserves and government laws might give a twofold assurance of safety. Such a stablecoin, HKDG, might compete with major stablecoins such as USDT and USDC, which have market capitalizations of $830 billion and $280 billion, respectively. Given Hong Kong’s $430 billion in foreign exchange reserves, a government-backed HKDG has better credibility and reduced risk.
The projected HKDG could potentially be a major step towards de-dollarization. While it may not be able to challenge the US dollar’s dominance on its own, it may be able to do so within the digital asset ecosystem. The successful deployment of HKDG could motivate other sovereign currencies to follow suit, fostering global financial market diversification.
In short, the appeal for a government-backed stablecoin like HKDG emphasises Hong Kong’s potential and necessity to build a more commanding position in the fast rising digital economy.
Wang Yang, Vice President and Chief Science Advisor of the Hong Kong University of Science and Technology and the Hong Kong Web3.0 Association, co-authored this proposal with renowned angel investor Wensheng Cai, Web3.0 Tech company founder Zhibin Lei, and doctoral student Yizhou Wen from the Hong Kong University of Science and Technology. They are arguing for a fundamental adjustment in strategy.