China is currently proposing a new stablecoin that would work with a basket of several Asian currencies. Some of these fiat currencies would include the Japanse yen, the Koren won, the Hong Kong dollar and the Chinese yuan. This proposal aims at increasing and promoting trade among these countries.
A New Stablecoin for Asian Countries
According to a translated version of ChainNews, Shen Nanpeng, one of the members of the Chinese People’s Political Consultative Conference, stated they could create these stablecoin backed by currencies from several Asian countries. It is worth mentioning that Shen Nanpeng is also a global managing partner at Sequoia Capital.
Stablecoins have been expanding all over the world with Tether (USDT) being the most famous. Binance and Coinbase have also created their stablecoins called Binance USD (BUSD) and USD Coin (USDC), respectively. Other stablecoins in the market include DAI, Paxos Standard (PAX) or even TrueUSD (TUSD).
By having a shared stablecoin across countries, it may be easier for exporters and importers to pay for goods and services that can be provided by companies from other countries. In the past, we have heard how Facebook aimed at creating a stablecoin backed by a basket of currencies from different countries. Nonetheless, this proposal is currently in stand by.
WIth the stablecoin proposed by China, it may be possible to make easier cross-border transfers. This would certainly have a positive effect on the costs of sending and receiving money and on settlement times. Furthermore, it could be a great way to stimulate local economies after the Coronavirus crisis that expanded all over the world.
It is worth mentioning that China has been working on its own Central Bank Digital Currency (CBDC) since 2017. The main goal is to also make more effective the monetary policy of the country and offer better payment solutions to participants in the market. Furthermore, the report shows that this new proposal to create a digital currency with different countries could also be a “test case” for China and its central bank digital currency.
At the moment, there is no more information on which are the development stages of China’s CBDC. Nonetheless, it may be interesting to see how this currency would work. Other countries are also working on CBDCs as well, including Ukraine, Sweden or Uruguay. Other nations are investigating the possible effects – both positive and negative – that would be linked to creating a CBDC.