Crypto advocates believe the HKDG would help boost Hong Kong's financial system.
Cryptocurrency and blockchain enthusiasts have offered the Hong Kong government to introduce its own stablecoin tied to the local dollar.
As per an English interpretation of a report from July 3rd, shared by Chinese crypto journalist Colin Wu, a quartet of individuals connected to financial innovation have proposed the creation of a stablecoin titled HKDG (Hong Kong Dollar Government).
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Individuals behind this innovation argue that such a move would enhance Hong Kong's leadership in the digital economy.
In particular, the report regarding the matter from Colin Wu read:
Issuing a stablecoin pegged to the Hong Kong dollar not only helps to solidify Hong Kong’s leadership in the blockchain sector but also propels the progress of the digital Hong Kong dollar, enhancing transaction efficiency, reducing transaction costs, improving current payment systems, and further strengthening Hong Kong’s fintech capabilities.
On top of that, the authors of the proposal claimed that the Hong Kong Dollar stablecoin can enhance Hong Kong's financial system's "stability, freedom of exchange, high security, openness, and cross-border liquidity.”
The co-authors criticized the government's conservative stance of encouraging private institutions to release stablecoins tied to the Hong Kong dollar, stating that this approach was contrary to its commitment to promoting cryptocurrency and blockchain technologies.
As of March 2023, they pointed out that Hong Kong's foreign exchange reserves, estimated at around $430 billion, "significantly surpassed" the joint market capitalization of Tether (USDT) and USD Coin (USDC), which stands at approximately $120 billion.
HKDG backed by the SAR <special administrative region> government will have higher credibility and lower risk, <...> especially as the credibility of USDT remains in question, and USDC has recently experienced severe discounts.
The authors also outlined potential benefits of the HKDG, such as challenging the United States dollar's dominance, increasing liquidity for government projects, and facilitating risk monitoring and assessment by officials.
In other news, at the end of June, the Hong Kong government assembled a task force to supervise the development of the Web3 industry.
The call for the Hong Kong government to release its own stablecoin illustrates the growing desire to decentralize currency control away from dominant global powers.
