Chairman of the Hong Kong Institute of International Finance (HKIIF), Xiao Geng, recently highlighted the potential benefits to Hong Kong of a stablecoin coin listed on the CNY exchange rate.
According to a report by Xinhua Finance , Xiao gave a speech at the “First Shenzhen Financial Forum and Opening Ceremony of the Shenzhen Institute of Finance.” The event was organized by Renmin University of China and included a session focused on digital finance.
Hong Kong’s special status for the Chinese yuan
During the speech, Xiao stressed that a stablecoin pegged to the Chinese yuan could strengthen the overseas CNY market and cement Hong Kong’s position as an international financial center.
Xiao said Hong Kong plays a key role in the international promotion of the Chinese yuan, being the world’s largest overseas CNY business center. He noted that the Greater Bay Area ‘s cross-border CNY products are particularly innovative.
He also underscored Hong Kong’s tradition as a testing ground for financial innovation, supported by a solid institutional and market foundation that allows trials to take place with minimal resistance. And he affirmed the city’s ability to support and develop advanced digital financial infrastructure.
That’s why Xiao advocated the creation of a Greater Bay Area stablecoin pegged to the Chinese yuan. The coin, based on regulated blockchains and digital smart contracts, will elevate Hong Kong’s status in the global financial sector.
Benefits of a CNY-linked stablecoin
He explained that such a stablecoin could strengthen Hong Kong’s position, taking advantage of its role as an experimental zone for the internationalization of CNY and its novel, borderless products in CNY.
In addition, the initiative could better integrate the financial systems of the Mainland Onshore and Hong Kong-Makau Offshore Special Economic Zones.
According to Xiao, stablecoin could balance the USD-dominated international financial system, while enriching the spectrum of products in the CNY offshore market.
On the other hand, stablecoin would create “firewalls” and “spare tires” to protect against systemic risks that could arise from a potential collapse of the US dollar, where the Hong Kong dollar is pegged to the US dollar.
