Officials from China have started to propose a regional stablecoin, one backed by four major currencies of Asia. This proposed currency has been proposed in order to help stimulate trading between Japan, China, and Korea.
Proposing An Eastern Asia-backed Stablecoin
Shen Nanpeng stands as a member of the Chinese People’s Political Consultative Conference, as well as a global managing partner at Sequoia Capital. Nanpeng had recently proposed that digital currency should be developed during the national session that was hosted on Thursday, the 21st of May, 2020.
This proposed stablecoin will stand as backed by a range of currencies. These include the Korean Won, the Japanese Yen, the Hong Kong Dollar, and, of course, the Chinese Yuan.
Aiming For Economic Stimulation
While the currencies of this sort are not explicitly built on a blockchain network, nor are they technically a cryptocurrency, digital currencies of these types are ever-popular. A prime example of a coin of similar likeness would be the ever-popular Tether stablecoin (USDT), as well as the USD Coin (USDC). National digital currencies are set to maintain their price through the process of backing, much like stablecoins, as well.
This proposed stablecoin had been brought forward with a goal in mind: That of facilitating cross-border transactions within the regions quickly and easily. This proposal stands to reduce the costs of converting currencies, as well as improve the settlement times of transactions, in general.
Furthermore, the use of this stablecoin can serve as a test case for other forms of national digital currency, as well. This stablecoin stands as a way to economically recover from the crisis that is the COVID-19 pandemic, as well. The proposal stated that this coin would stimulate trade, thus helping the economy on its path to recovery.
China In Development Of Separate CBDC
It seems that China is planning to have this coin be distinct from its own central bank digital currency, or CBDC. This secretive CBDC has been in development since the year 2017. The People’s Bank of China will lead this new form of CBDC, and through what can be gathered, it will only serve as a collaborator and potential supervisor to this regional stablecoin.
The report is viewing this new basket of currencies as a form of “test case” for the Chinese CBDC. Of course, it was quickly noted that this stablecoin would “seamlessly” connect with the Chinese CBDC, as well. Either way, the time it will take to develop this new form of digital currency is considerable.