Mr. Lo Cheuk-kin: Developing stable currencies to protect Hong Kong's edge as a financial center

With the rapid development of global financial technology, the stable currency, as an emerging digital currency, is gradually embedded in the international financial system. In the face of the fast-changing financial market and geopolitics, Hong Kong cannot afford to lag behind. With its mature financial market and stable policy environment, Hong Kong is well-positioned to develop stable money. If Hong Kong can make full use of these advantages and actively promote the development of stable money, it will be able to consolidate its position as an international financial center.

Cross-border funding cooperation

Hong Kong's financial market possesses a high degree of sophistication, which makes it an ideal venue for cross-border capital cooperation. On the application of stable money, Hong Kong can cooperate with financial institutions in other regions to explore its potential in international clearing and cross-border application models. The application of stable money in cross-border trade and capital exchange can enhance Hong Kong's role as a hub for global Web3 capital flows and further strengthen its international influence.

The pegging of the Hong Kong dollar to the US dollar in Hong Kong provides a good environment and foundation for the establishment of a stable currency in Hong Kong. In addition, enterprises can use the stable currency to make fast, low-cost cross-border payments, which not only improves the efficiency of capital flow, but also reduces exchange rate risks. This will also help promote cross-border transactions under the "One Belt and One Road" initiative. With the growing acceptance of digital currencies around the world, Hong Kong has the opportunity to become a major center for stable currency trading.

Applications in Payment and Capital Markets

Stablecoins have great potential for application in payments, capital markets, supply chain and Web3 ecosystems. Hong Kong should support enterprises to explore the application of stable money in these areas, and establish demonstration projects to promote practical cases through policy guidance.

Meanwhile, cross-boundary cooperation is also an important strategy to promote the widespread application of stable money. Hong Kong can encourage cooperation among traditional financial institutions, payment platforms and technology companies to jointly promote the application of stable money, which will help enhance the efficiency and accessibility of financial services.

Apart from cross-border and payment, the stable currency can also be used for fund raising and asset management, further expanding its scope of application. As more and more offshore RMB circulates in Hong Kong, Hong Kong can also consider how to effectively utilize this capital.

The SAR Government should relax regulation

Expanding Participation in the Regulatory Sandbox The development of stablecoins requires a healthy ecosystem, which requires deregulation to promote competition. In July last year, the Hong Kong Monetary Authority announced the list of participants in the "sandbox" for stablecoin issuers. However, there were only three companies on the list, which limits the development of start-ups in an emerging industry where innovations are made on a daily basis.

The purpose of regulating sandboxes is to provide a testing ground for innovative projects. However, at present, there are more restrictions on participants, especially unclear capital and technical requirements, resulting in many potential start-up projects not being able to participate and limiting the development of innovation in Hong Kong. It is therefore necessary to expand the scope of participation in the Sandbox. Relaxing the application criteria so that more start-ups and innovative projects can test their new products in a low-risk environment will help stimulate innovation across the industry, which will further enhance the effectiveness of the application of stable coins.

In addition, Hong Kong's common law provides good legal security and protection for all stakeholders, which is particularly important in the development of stable money. If the Government can speed up the regulatory policy and approval process for funds custody and over-the-counter transactions, it will help stimulate financial innovation and also attract more start-ups into the market, creating a diversified market landscape.

Building the Web3 Cluster

To enhance Hong Kong's international status as a center for Web3 technology and virtual asset development, Hong Kong should construct a Web3 industry cluster. Web3 industrial parks should be set up in specific regions to provide infrastructure and preferential policies to attract enterprises and talents to gather. In addition, organizing regular international conferences on Web3 and virtual asset themes will facilitate enterprise exchanges and resource integration, further enhancing Hong Kong's influence in the global Web3 arena.

At the same time, the SAR can promote the establishment of Web3 open standards to lower the participation threshold and encourage more enterprises to join the Web3 ecosystem.

Hong Kong can't afford to miss out on new opportunities

The development of stable currencies provides new opportunities for Hong Kong to further consolidate its position as an international financial center through cross-border capital cooperation, deregulation, expanding the scope of sandbox participation, and building up the Web3 industry cluster. Against the backdrop of rapid changes in the global financial system and geopolitics, Hong Kong must capitalize on this opportunity and meet the challenges ahead with innovation as the driving force.

(The author is Mr. Luo Zhuojian, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), a consultant expert of the Ministry of Finance, and a Justice of the Peace)

(This article is the view of the author and does not represent the position of the media)