The Chinese officials are now ready to launch an East Asian Stablecoin that will span across three East Asian countries which will be backed by an Asian digital currency as we are reading in the coming altcoin news.
The currencies that are involved are the Japanese yen, the Chinese yuan, the Hong Kong dollar, and the Korean won. This effort is different from the one of the People’s Bank of China is launching a central bank digital currency. Chinese officials proposed a regional stablecoin that is backed by four major Asian currencies which are meant to stimulate trade between Japan, China, and Korea.
The member of the Chinese People Political Consultative Conference Shen Nanpeng, who is also a managing partner at Sequoia Capital, proposed the digital currency during the national session back on Thursday. The stablecoin will be backed by a basket of currencies including the Chinese yuan, Hong Kong dollar, the Japanese yen, and the Korean won. Though the assets are not built on the blockchain, nor they are technically a cryptocurrency, a digital currency of this type is compared to the stablecoins such as USDC and Tether. The national digital asset just like the stablecoins maintains price parity with the backing.
The proposed stablecoin is meant to facilitate a cross-border transaction in the region which will reduce currency conversion costs and will improve transaction settlement times. Also, the stablecoin is a test case for other national digital currencies by assisting the economic recovery in the aftermath of the COVID19 crisis in order to stimulate trade. This currency seems to be distinct from China’s central bank digital asset which was under development since 2017. The efforts to create a CBDC are led by the People’s Bank of China and it was only mentioned as a potential supervisor and a collaborator for the regional stablecoin.
The report considers this basket of currencies a test case for the Chinese CBDC and notes that the stablecoin will be connected to the CBDC. In any other case, it will take time to develop the new digital asset. In the initial stages, the group that is responsible will test the stablecoin in a regulatory sandbox that was built in a custody system and improve cooperation between Hong Kong and the Chinese mainland.
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