Xiao Geng, Chairman of the Hong Kong Institute for International Finance (HKIIF) spoke at a recent event, about the potential benefits of introducing a stablecoin tied to the Chinese yuan for Hong Kong.
During his address at “The First Shenzhen Finance Forum and the Opening Ceremony of Shenzhen Finance Institute,” organized by the Renmin University of China, Xiao emphasized the importance of such a stablecoin in strengthening the Offshore CNY market and reinforcing Hong Kong’s position as a leading global financial center.
Xiao emphasized the creation of a Greater Bay Area stablecoin connected to the Chinese yuan and also stated that this stablecoin, based on regulated blockchains and digital smart contracts, is a way to enhance Hong Kong’s competitiveness in the international financial landscape.
He emphasized Hong Kong’s pivotal role in promoting the Chinese yuan internationally, citing its position as the largest offshore CNY business hub globally. Xiao particularly lauded the innovative cross-border CNY products in the Greater Bay Area.
As per Xio Geng, such a stablecoin could strengthen Hong Kong’s position by leveraging its role as an experimental zone for CNY internationalization and its innovative boundary-less CNY products.
Moreover, Xiao proposed that this initiative could foster greater integration between the financial systems of Mainland Onshore and Hong Kong-Macau Offshore special economic zones.
He argued that the stablecoin could help mitigate risks associated with the dominance of the USD in the international financial system, while also expanding the range of products in the offshore CNY market.
Additionally, Xiao suggested that the stablecoin could serve as a “firewall” and “spare tire” to safeguard against systemic risks stemming from a potential collapse of the USD, to which the Hong Kong dollar is pegged.
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