• The Hong Kong government is launching a stablecoin pegged to the region’s dollar in order to challenge the US dollar’s dominance.
• This is in response to several calls on the government to create a stablecoin to leverage its numerous benefits.
• A group of financial innovators have been advocating for a “Hong Kong Dollar Government” (HKDG) in order to support and contribute to the digital economy.
Introduction
The Hong Kong government is launching a stablecoin pegged to the region’s dollar in order to challenge the US dollar’s dominance. This comes in response to several calls on the government to create a stablecoin which would provide numerous benefits, such as efficiency, openness, stability, security, and cross border liquidity.
Advocates for HKDG
A group of financial innovators have been advocating for a “Hong Kong Dollar Government” (HKDG) in order to support and contribute to the digital economy. This includes: 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 the paper.
Benefits Of HKDG
The proposal suggests that HKDG has various advantages compared with other popular crypto-based currencies including USDT, USDC Binance USD and TrueUSD. These include being able bridge gaps of inclusiveness while ensuring efficiency within the financial space as well as providing enhanced liquidity for government projects among others. Furthermore it will also help bolster transaction efficiency by reducing costs while improving current payment systems and further strengthen Hong Kong’s fintech capabilities.
Foreign Exchange Reserves
According to reports ,Hong Kong’s foreign exchange reserves were $430 billion as of March 2023 – more than combined market capitalization of USDT and USDC . It is this fund which would be used back up HKDG as it will ensure higher credibility with lower risk compared with private firms issuing its own crypto-currency linked with Hong Kong Dollar .