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Hong Kong Dollar Stablecoin Proposal: Hong Kong Dollar stablecoin based on foreign exchange reserves aims to reduce dependence on the U.S. dollar.

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Hong Kong Dollar Stablecoin Proposal: Hong Kong Dollar stablecoin based on foreign exchange reserves aims to reduce dependence on the U.S. dollar.

Vice-President of the Hong Kong University of Science and Technology, Wang Yang, and other Web3 experts in Hong Kong, contributed an article to the pro-establishment newspaper "Ta Kung Pao," suggesting the issuance of a Hong Kong stablecoin backed by foreign exchange reserves to strengthen Hong Kong's leading position in blockchain technology and take a substantial step towards "de-dollarization."

Stablecoin Based on Foreign Exchange Reserves: Hong Kong Dollar Stablecoin

Hong Kong currently only allows and encourages private institutions to issue Hong Kong dollar stablecoins. However, Hong Kong University of Science and Technology Vice President Wang Yang and other Web3 experts in Hong Kong believe this approach is too conservative. They argue that Hong Kong must have higher ambitions and determination on this issue. They are calling on the government to issue a Hong Kong dollar stablecoin, HKDG, backed by Hong Kong's foreign exchange reserves, with the "G" representing government. A government-backed Hong Kong dollar stablecoin would benefit from government regulation and the transparency and immutability brought by blockchain contracts, providing strong support for Hong Kong's leading position in the digital finance sector.

As of March 2023, Hong Kong's foreign exchange reserves total a whopping $430 billion, far surpassing USDT's $83.3 billion and USDC's $27.7 billion. Unlike USDT, which faces reputation concerns, and USDC, which recently had issues, HKDG, as a government-backed stablecoin, has the potential to challenge the dominance of USD stablecoins and become a mainstream stablecoin in the blockchain and digital asset ecosystem.

Ambition for De-dollarization

The article points out that while the dominance of the US dollar is not easily shaken, with the rapid development of the blockchain and digital asset ecosystem, the powerful HKDG can challenge US dollar dominance within this ecosystem, effectively achieving de-dollarization. Furthermore, the success of HKDG is likely to prompt other sovereign currencies to follow suit, further promoting diversification in the global financial market.

HKDG also has the potential to address obstacles in international cooperation arising from factors like currency policies and trade restrictions. For example, HKDG could provide a simpler, more convenient, and reliable means of fund circulation and enhance fund utilization efficiency for the "Belt and Road Initiative."

dForce Founder Yang Mindao: The Hong Kong Dollar Itself Is a USD Stablecoin!

dForce founder Yang Mindao expresses skepticism about "de-dollarization" because under Hong Kong's linked exchange rate system, the USD/HKD is pegged to the US dollar within a range of 7.75 to 7.85 and backed by a 100% foreign exchange reserve. Therefore, the Hong Kong dollar itself serves as a USD stablecoin, so where does the need for "de-dollarization" come from?

However, some netizens jest that the 7.75 to 7.85 exchange rate, about a 1.2% fluctuation range, is more stable than most stablecoins! Yang Mindao also believes that the design of most stablecoins, including USDT, USDC, DAI's PSM, Frax, and FEI, is based on the reserve and anchoring mechanism of the Hong Kong dollar.