HKIIF Chair Advocates for Hong Kong to Develop CNY-Pegged Stablecoin

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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May 20, 2024 04:27 EDT

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The Hong Kong Institute for International Finance (HKIIF) Chairman Xiao Geng recently highlighted the potential benefits of a CNY-pegged stablecoin for Hong Kong during an event.

According to a report by Xinhua Finance, Xiao delivered a speech at “The First Shenzhen Finance Forum and The Opening Ceremony of Shenzhen Finance Institute.” The event was hosted by Renmin University of China and had a session focused on digital finance.

Hong Kong’s Special Status for Chinese Yuan

During the speech, Xiao emphasized that a stablecoin pegged to Chinese yuan could enhance the offshore CNY market and strengthen Hong Kong’s position as an international financial center.

Xiao said that Hong Kong plays a crucial role in the international promotion of the Chinese yuan, serving as the world’s largest offshore CNY business hub. He noted that the Greater Bay Area’s cross-border CNY products are particularly innovative.

Xiao highlighted Hong Kong’s tradition as a testing ground for financial innovations, supported by a robust institutional and market foundation that allows for trials with minimal resistance.

He also acknowledged the city’s capability to support and develop advanced digital financial infrastructures.

Therefore, Xiao advocated for the creation of a Greater Bay Area stablecoin linked to the Chinese yuan. This stablecoin, based on regulated blockchains and digital smart contracts, elevate Hong Kong’s status in the global financial sector.

Benefits of CNY-Pegged Stablecoin

He explained that such a stablecoin could solidify Hong Kong’s position by leveraging its role as an experimental zone for CNY internationalization and its novel boundary-less CNY products.

In addition, this initiative could further integrate the financial systems of the Mainland Onshore and Hong Kong-Macau Offshore special economic zones.

According to Xiao, the stablecoin could balance the USD-dominated international financial system while enriching the spectrum of offshore CNY market products.

On the other hand, the stablecoin would construct “firewalls” and “spare tires” to guard against systemic risks that might arise from a potential collapse of the USD, where the Hong Kong dollar is pegged to the US dollar.