Hong Kong and CBDC are looking for ways to cooperate
2023.01.05 07:01
Hong Kong and CBDC are looking for ways to cooperate
Budrigannews.com – The authorities of Hong Kong are currently proposing to issue a central bank digital currency (CBDC) in the form of a stablecoin that is backed by the government and are looking for new designs for it.
Wu Jiezhuang, who is a member of the Legislative Council of the Hong Kong Special Administrative Region, is of the opinion that converting the Hong Kong digital dollar (e-HKD) into a stablecoin would encourage the use of innovative technologies like Web3.
Wu Jiezhuang stated in an interview with China Blockchain News on January 5 that the possibility of developing e-HKD into a stablecoin has the potential to effectively address the risks associated with virtual assets in Web3. The legislator claims that a design similar to this one for the Hong Kong digital dollar would assist authorities in gaining investors’ trust in the Web3 industry and improve user security against threats like hacking.
Wu Jiezhuang stated, referring to the failures of several stablecoin projects in 2022, which resulted in a domino effect on the cryptocurrency market, that “the stablecoins that are currently available in the market are all issued by some private companies and are not subject to government supervision.”
Additionally, the legislator stated that the stablecoin could be linked to decentralized finance (DeFi) for improved access in Web3 ecosystems:
“The Hong Kong government can consider whether the issuance of digital Hong Kong dollars can be connected with decentralized finance and become an important infrastructure component of the virtual asset trading platform.”
Wu Jiezhuang is a founding member of G-Rocket, a startup accelerator that aims to attract 1,000 Web3 businesses to the city-state over the next three years in addition to his position as a member of the Hong Kong Legislative Council. In 2016, he and Hong Kong legislative council member Jonny Ng Kit-Chong co-founded G-Rocket.
The most recent government official to emphasize the potential advantages of CBDC and DeFi in combination is Wu Jiezhuang. In September 2022, a member of the Swiss National Bank’s governing board, Thomas Moser, said that a CBDC could give DeFi more stability and lower the risks of its development.
A CBDC doesn’t have to compete with a private or decentralized cryptocurrency, according to Mikkel Morch, executive director of the digital asset hedge fund ARK36. He also mentioned that a CBDC might lessen the significance of private stablecoins.
