Hong Kong authorities are searching for new designs for a central financial institution digital forex (CBDC), now proposing to problem a CBDC within the type of a stablecoin backed by the federal government.
Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Particular Administrative Area, believes that turning the Hong Kong digital greenback (e-HKD) right into a stablecoin would offer advantages for the adoption of recent applied sciences like Web3.
The choice of creating e-HKD right into a stablecoin has the potential to handle the dangers related to digital belongings in Web3 successfully, Wu Jiezhuang stated in an interview with China Blockchain Information on Jan. 5. Based on the lawmaker, such a design of the Hong Kong digital greenback would assist authorities acquire buyers’ belief within the Web3 business and higher defend customers from points like hacks.
“The stablecoins which can be at present accessible out there are all issued by some non-public corporations and usually are not topic to authorities supervision,” Wu Jiezhuang stated, referring to failures of a number of stablecoin tasks in 2022, which brought on a domino impact on the crypto market.
A photograph of Wu Jiezhuang. Supply: The Restricted Instances
The lawmaker additionally identified that the stablecoin could possibly be related to decentralized finance (DeFi) for higher entry in Web3 ecosystems, stating:
“The Hong Kong authorities can contemplate whether or not the issuance of digital Hong Kong {dollars} could be related with decentralized finance and turn out to be an essential infrastructure element of the digital asset buying and selling platform.”
Aside from his position as a Hong Kong Legislative Council member, Wu Jiezhuang can also be a founding member of G-Rocket, a startup accelerator that goals to draw 1,000 Web3 companies to arrange store within the city-state over the following three years. He co-founded G-Rocket with Hong Kong legislative council member Jonny Ng Equipment-Chong in 2016.
Associated: How crypto could possibly be good for CBDC and vice versa: Trade exec explains
Wu Jiezhuang is the newest authorities official to focus on the potential advantages of the mixture of CBDC and DeFi. Thomas Moser, a governing board member on the Swiss Nationwide Financial institution, stated in September 2022 {that a} CBDC might present extra stability to DeFi and scale back the dangers of its improvement.
Beforehand, Mikkel Morch, government director on the digital asset hedge fund ARK36, steered {that a} CBDC doesn’t must be a competitor to a non-public or decentralized cryptocurrency. On the similar time, a CBDC might doubtlessly diminish the position of personal stablecoins, he famous.
