The proposal released by the top Chinese political advisers this Thursday describes about the currency as stablecoin as a term for crypto that is designed to keep its value as well as being supported by a backup currency. That being said, there are no explicit mentions of the words “crypto” or “blockchain” within the said proposal.
It was the People’s Bank of China (PBOC) who led the particular proposal. The set of primary collateral would abide with the special drawing rights (SDR) model headed by the International Monetary Fund (IMF), wherein every country’s currency is assigned varying values gauged by their respective economy.
The proposal stablecoin by the advisors of the Chinese government is believed to have the ability to aid with the facilitation of trade among four Asian countries. This is seen by the proponents as the key to lead the economic recovery within the region after the devastating drop it experienced due to the coronavirus pandemic. It would do just that by proving the cross-border settlements and by polishing up the services via a new payment network on top of a digital wallet to be used for enterprises.
Neil Shen, the founding partner of Sequoia China and a member of the upper house of China, has presented the proposal to the legislators of the country during the Two Sessions – China’s largest political gathering.
Nine other advisers who are also members of the upper house co-signed the proposal. This notably includes Kennedy Wong – an advocate for Hong Kong’s Supreme Court, Henry Tang – a former secretary in chief of Hong Kong, and Songqiao Zghang – a Chinese billionaire based on Hong Kong.
Shen attended the initial session of the Political Consultative Conference (PCC) of China this last Thursday. This meeting will then be followed by National People’s Congress’ (NPC) full sessions that would start this Friday and will last up until approximately two weeks.
The proposals that emerge from PCC does not tend to have the equal level in terms of influence compared to the more solid bills tackled within the NPC. This is because the bills tend to produce major changes in the laws and regulations. In this particular case, however, the proposal might just have the needed sticking power to survive.
The proposal dictates that companies from different private sectors would develop the initiative and release the stablecoin by utilizing the newest monetary technology today as led by the PBOC. Enterprise users, on the other hand, would have the power to store the coins within a digital wallet and then promptly deposit cash at an overseer as backup for their respective stablecoins.
The Hong Kong Monetary Authority and the PBOC have the power to create a structure that regulates the stablecoin’s transactions from across the border. On top of that, they may also be responsible to the management of risks as well as the discouraging of money laundering.
This stablecoin may be released ahead of the national digital currency of China and shall pave the way for its apparent launching by use case testing in order to determine potential risks as well as technical issues. When the proposal does indeed pass and the stablecoin is officially launched, it may seamlessly connect with that of the digital Yuan as the proposal indicates.
Hong Kong is seen by the advisers as one of the most integral monetary gateways that connect China to other Asian countries. This is because over 70% of cross-border renminbi payments are processed within Hong Kong alone. With that, the country could be the favorite to give jurisdiction over such a regional stablecoin.