According to TKWW, key figures including the vice president of HKUST suggest that the Hong Kong government should issue its own stablecoin, known as HKDG, as a strategic move to boost the city’s digital economy.

The continued promotion and acceptance of digital assets by the Hong Kong SAR government positions it ahead of countries or regions such as the US and Singapore. Against this backdrop, stablecoins, which bridge the gap between traditional finance and the digital economy, are becoming increasingly important. The issuance of a Hong Kong dollar-pegged stablecoin could significantly improve transaction efficiency, reduce costs, and strengthen the region’s fintech capabilities.

However, industry insiders consider the government’s current stance of encouraging private institutions to issue Hong Kong dollar stablecoins to be too conservative. This strategy could lead to stablecoins with marginal market impact, a concern underscored by the example of Singapore’s XSGD.

Experts argue that a Hong Kong dollar stablecoin, backed by the city’s foreign reserves and government regulations, could provide a double guarantee of security. Such a stablecoin, HKDG, could pose a challenge to mainstream stablecoins like USDT and USDC, which currently have market capitalizations of $830 billion and $280 billion, respectively. Given Hong Kong’s foreign exchange reserves of $430 billion, a government-backed HKDG offers greater credibility and lower risk.

The proposed HKDG could also represent a significant step towards de-dollarization. While it may not by itself disrupt the US dollar’s dominance, it could challenge its supremacy within the digital asset ecosystem. The successful implementation of HKDG could inspire other sovereign currencies to follow suit, promoting diversification in the global financial market.

In essence, the call for a government-backed stablecoin like HKDG underscores both the potential and the urgency for Hong Kong to establish a more dominant presence in the rapidly growing digital economy.

This proposal is co-authored by Wang Yang, Vice President and Chief Scientific Advisor of the Hong Kong University of Science and Technology and Hong Kong Web3.0 Association, along with renowned angel investor Wensheng Cai, the founder of the Web3.0 company. Tech, Zhibin Lei, and PhD student Yizhou Wen from the Hong Kong University of Science and Technology. Together, they advocate for a significant change in strategy.