Hong Kong wants to propose issuing a CBDC as a stablecoin backed by the government

Authorities in Hong Kong are considering new concepts for a central bank digital currency (CDBC) and are now recommending that a CBDC be issued as a stablecoin supported by the government. A stablecoin version of the Hong Kong digital dollar (e-HKD) would facilitate the adoption of cutting-edge technologies like Web3, according to Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Special Administrative Region.

The possibility of turning e-HKD into a stablecoin has the ability to properly solve the dangers connected to virtual assets in Web3. A design like this for the Hong Kong digital dollar, in the legislator’s opinion, would assist government officials win investors’ confidence in the Web3 sector and better safeguard users against problems like hackers.

The Hong Kong government may take into account whether the creation of digital Hong Kong dollars can be linked to decentralized finance and develop into a significant element of the platform’s infrastructure for trading virtual assets.

The most recent government representative to stress the advantages of mixing CBDC and DeFi is Wu Jiezhuang. In September 2022, Thomas Moser, a member of the Swiss National Bank’s governing board, stated that a CBDC may give DeFi more stability and lower the risks associated with its growth.

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