Hong Kong University has come up with a plan to create a government-supported digital currency called Hong Kong Dollar (HKD) stablecoin. This idea aims to tackle the difficulties faced by privately owned stablecoins, especially when it comes to competing with the big market values of stablecoins based on the United States Dollar (USD).
A government-supported digital currency called HKD stablecoin could bring many advantages to Hong Kong's financial system. One of the main benefits is that it would make it easier to move money between countries by providing a digital version of the Hong Kong Dollar that can be used internationally. This would make it simpler and faster for businesses and people to make payments across borders, making things more convenient for everyone involved.
Additionally, if the government creates a digital currency called HKD stablecoin, it could help make transactions faster and cheaper in the local economy. They can use a technology called blockchain to settle transactions more quickly and at a lower cost compared to traditional banks. This would make financial processes more efficient and might help the economy grow.
The proposal says it's important for everyone to have access to money and banking services. Some people don't have bank accounts or can't use them easily. To help them, the government wants to create a digital currency that is safe and easy to use. This will allow people without bank accounts to store and send money easily. It will help more people have access to banking services and feel more in control of their finances.
Private stablecoins are digital currencies that are commonly used but can have difficulties in gaining trust and remaining stable. This is because they rely on the assets they are backed by and the overall market conditions. In contrast, government-backed stablecoins can take advantage of the reputation and stability of the government that issues them. This can make people feel more confident and trust the digital currency more.
However, it's important to understand that creating a government-supported HKD stablecoin would need a lot of careful thought and work together with different groups involved, such as the Hong Kong government, banks, and organizations that regulate financial activities. We would need to make sure there are rules and systems in place to follow the law, protect people who use the stablecoin, and keep things stable and secure.
