Hong Kong lawmaker wants to turn CBDC into stablecoin featuring DeFi

Hong Kong authorities are on the lookout for new designs for a central financial institution digital foreign money (CBDC), now proposing to challenge 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 growing e-HKD right into a stablecoin has the potential to deal with the dangers related to digital property in Web3 successfully, Wu Jiezhuang mentioned in an interview with China Blockchain Information on Jan. 5. In response to the lawmaker, such a design of the Hong Kong digital greenback would assist authorities acquire traders’ belief within the Web3 business and higher shield customers from points like hacks.

“The stablecoins which might be presently accessible out there are all issued by some non-public firms and are usually not topic to authorities supervision,” Wu Jiezhuang mentioned, referring to failures of a number of stablecoin initiatives in 2022, which brought about a domino impact on the crypto market.

The lawmaker additionally identified that the stablecoin may very well be linked to decentralized finance (DeFi) for higher entry in Web3 ecosystems, stating:

“The Hong Kong authorities can take into account whether or not the issuance of digital Hong Kong {dollars} could be linked with decentralized finance and turn into an vital infrastructure part of the digital asset buying and selling platform.”

Aside from his function 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 Package-Chong in 2016.

Associated: How crypto may very well be good for CBDC and vice versa: Business exec explains

Wu Jiezhuang is the most recent 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, mentioned in September 2022 {that a} CBDC may present extra stability to DeFi and cut back the dangers of its improvement.

Beforehand, Mikkel Morch, government director on the digital asset hedge fund ARK36, urged {that a} CBDC doesn’t need to be a competitor to a personal or decentralized cryptocurrency. On the identical time, a CBDC may probably diminish the function of personal stablecoins, he famous.