The Two Sessions, China’s biggest political gathering in 2020, heard an interesting proposal from some of China’s top political advisers – the creation of pan-Asian stablecoin. As such, the stablecoin project “would be backed by fiat currencies like the Japanese yen, the Hong Kong dollar, China’s yuan, and the Korean won.
According to a report from the meeting, published on May 21, the proposal notes that The People’s Bank of China would be in charge of the project. The collateral basket of currencies would be in conjunction with the IMF’s Special Drawing Rights (SDR) model. SDR suggests each country gets its currency assigned with a different level of weight in the backing currency mix.
However, the plans of creating a stablecoin that would service most of East Asia closely mimic Facebook’s attempt of creating a global stablecoin – the Libra project. The social media giant bent over the regulatory pressure and took a different approach, creating plans for several single currency-backed stablecoins. Despite the havoc, Libra welcomed Singapore investment firm Temasek, which is the first state-owned company in Libra Association.
The advisors’ proposal is aimed at helping cross-border trading in East Asia, which may turn out to be a key factor in reviving East Asia’s post-coronavirus economy. The helping tools would be a new cross-border settlement system, as well as enterprise wallets to store the new digital currency.
The proposers, one of which – Neil Shen, managing partner at Sequoia China, are all from the upper house members of China’s parliament. Other key members include the former Hong Kong chief secretary Henry Tang, Hong Kong’s solicitor of the Supreme Court Kennedy Wong, as well as Chinese billionaire Songqiao Zhang.
The proposal first entered the first session of the People’s Political Consultative Conference (PCC), designed to help China’s government take national decisions, with advisory from independent member and company representatives. However, the proposal to the PCC has less influence than the discussions in the National People’s Congress, which starts on May 22, and lasts two weeks.
The plans for pan-Asian stablecoin do not dilute China’s plans of a state-issued central bank digital currency (CBDC), which is under the radar of crypto experts since 2017.