According to TKWW, key figures including HKUST Vice-President suggest that the Hong Kong government should issue its own stablecoin, referred to as HKDG, as a strategic move to bolster the city’s digital economy.
Hong Kong SAR government’s ongoing promotion and acceptance of digital assets positions it ahead of countries or regions such as the U.S and Singapore. In this context, stablecoins, bridging the gap between traditional finance and the digital economy, are becoming increasingly important. Issuing a stablecoin linked to the Hong Kong dollar could significantly enhance transaction efficiency, reduce costs, and strengthen the region’s fintech capabilities.
However, the government’s current stance of encouraging private institutions to issue Hong Kong dollar stablecoins is seen as too conservative by industry insiders. This strategy might lead to stablecoins with marginal market impact, a concern underscored by the example of Singapore’s XSGD.
The experts argue that a Hong Kong dollar stablecoin, supported by the city’s foreign exchange reserves and government regulations, could provide a double guarantee of safety. Such a stablecoin, HKDG, could pose a challenge to dominant stablecoins like USDT and USDC, which currently hold market capitalizations of $830 billion and $280 billion, respectively. Given Hong Kong’s foreign exchange reserves of $430 billion, a government-backed HKDG offers greater credibility and lower risk.
The proposed HKDG could also represent a significant step towards de-dollarization. While it might not singlehandedly disrupt the dominance of the US dollar, it could challenge its supremacy within the digital asset ecosystem. The successful implementation of HKDG could inspire other sovereign currencies to follow suit, promoting diversification in the global financial market.
In essence, the call for a government-backed stablecoin like HKDG underscores both the potential and urgency for Hong Kong to establish a more commanding presence in the rapidly growing digital economy.
This proposition is co-authored by Wang Yang, Vice President and Chief Science Advisor of the Hong Kong University of Science and Technology and the Hong Kong Web3.0 Association, alongside 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. Together, they’re advocating for a significant shift in strategy.