• Hong Kong lawmaker Wu Jiezhuang is proposing that the Hong Kong digital dollar (e-HKD) be turned into a government-backed stablecoin.
• Wu believes that a stablecoin backed by the government would provide benefits for the adoption of new technologies such as Web3.
• The stablecoin would also be connected to decentralized finance (DeFi) for better access to Web3 ecosystems.
Hong Kong authorities are exploring new designs for a central bank digital currency (CDBC) and are now proposing to issue a CBDC in the form of a stablecoin backed by the government. Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Special Administrative Region, believes that turning the Hong Kong digital dollar (e-HKD) into a stablecoin would provide benefits for the adoption of new technologies such as Web3.
Wu stated in an interview with China Blockchain News that such a design of the Hong Kong digital dollar would help authorities gain investors’ trust in the Web3 industry and better protect users from issues like hacks. Furthermore, the option of developing e-HKD into a stablecoin has the potential to address the risks associated with virtual assets in Web3 effectively.
The lawmaker also pointed out that the stablecoin could be connected to decentralized finance (DeFi) for better access in Web3 ecosystems. This would be beneficial since the current stablecoins in the market are all issued by private companies and are not subject to government supervision, which was highlighted by several stablecoin project failures in 2022, causing a domino effect on the crypto market.
Wu believes that a government-backed stablecoin would serve as a better entry point to Web3 compared to private stablecoins. He believes that such a design would provide users with more trust and security, as well as more opportunities to access different DeFi projects and services.
In addition to the proposed stablecoin, the Hong Kong government is also looking into other options for their digital currency. These options include a digital payments platform, a digital yuan-pegged token, and a digital yuan. All of these options are being explored to ensure the mass adoption of the digital currency and secure it from potential cyber threats.
The Hong Kong government is also exploring other ways to make the digital currency more accessible to citizens. One way this could be achieved is through integrating the digital currency with existing financial infrastructure, such as ATMs and online banking systems. This would make it easier for citizens to use the digital currency and would also increase its adoption in the city.
Overall, the Hong Kong government is looking into various options for their digital currency, with the proposed stablecoin being one of them. By issuing a stablecoin backed by the government, Hong Kong authorities believe that they can better protect users from issues like hacks, while also providing them with more trust and access to different DeFi projects and services.