Hong Kong lawmaker wants to turn CBDC into stablecoin featuring DeFi

Hong Kong authorities are in search of new designs for a central financial institution digital forex (CDBC), now proposing to concern 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 latest applied sciences like Web3.

The choice of creating e-HKD right into a stablecoin has the potential to deal with the dangers related to digital belongings in Web3 successfully, Wu Jiezhuang said 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 buyers’ belief within the Web3 business and higher shield customers from points like hacks.

“The stablecoins which are at the moment out there out there are all issued by some non-public corporations and should not topic to authorities supervision,” Wu Jiezhuang stated, referring to failures of a number of stablecoin initiatives in 2022, which induced a domino impact on the crypto market.

A photograph of Wu Jiezhuang. Supply: The Restricted Instances

The lawmaker additionally identified that the stablecoin could possibly be related to decentralized finance (DeFi) for higher entry in Web3 ecosystems, stating:

“The Hong Kong authorities can think about whether or not the issuance of digital Hong Kong {dollars} could be related with decentralized finance and grow to be an necessary infrastructure part of the digital asset buying and selling platform.”

Aside from his position as a Hong Kong Legislative Council member, Wu Jiezhuang can 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 subsequent three years. He co-founded G-Rocket with Hong Kong legislative council member Jonny Ng Equipment-Chong in 2016.

Associated: How crypto could possibly be good for CBDC and vice versa: Trade exec explains

Wu Jiezhuang is the most recent authorities official to focus on the potential advantages of the mix of CBDC and DeFi. Thomas Moser, a governing board member on the Swiss Nationwide Financial institution, stated in September 2022 {that a} CBDC may present extra stability to DeFi and cut back the dangers of its improvement.

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

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