Hong Kong Investment Committee: If stablecoins are widely accepted, it could significantly drop cross-border payment costs.

The Hong Kong “Stablecoin Regulation” officially came into effect on August 1. The chairman of the Investor and Financial Education Council (IFEC), Du Gan-kun, stated that the main use of stablecoins is as a cross-border remittance tool, and if it is widely accepted by society in the future, it is expected to significantly drop the cost of cross-border payments. However, he also reminded the public that stablecoins are related to Virtual Money, and those who do not fully understand the products should refrain from investing recklessly.

Positioning and Risk Warnings of Stablecoins

Du Gankun pointed out that stablecoins are issued by private institutions and are usually collateralized by mainstream fiat assets like the US dollar, resulting in relatively low volatility; however, if collateralized by cryptocurrencies, the price fluctuations will significantly increase.

He said, “Citizens who do not have enough understanding of the products should not invest in related products.”

He added that recent studies on the financial management abilities of Hong Kong people have shown:

1. The investment capability of Hong Kong residents shows an upward trend, reflecting the effectiveness of financial education.

2. Have a higher level of financial knowledge and a certain understanding of concepts such as risk and inflation.

3. However, there is a lack of long-term planning, and the attitude towards financial management still needs improvement.

The Monetary Authority promotes cross-border capital and payment innovations

The Vice President of the Hong Kong Monetary Authority, Chen Weimin, stated at the 7th Guangdong-Hong Kong-Macao Greater Bay Area Financial Development Forum that the Monetary Authority is actively encouraging mainland enterprises to establish overseas business headquarters and corporate treasury centers in Hong Kong to coordinate the allocation of overseas funds.

He pointed out that the global payment system still has pain points such as many intermediaries and high costs, and technological innovation will gradually solve these problems:

1. The application of blockchain technology in the payment field

2. Hong Kong is simultaneously advancing Central Bank Digital Currency (CBDC) and commercial bank digital currency.

3. The goal is to provide more convenient and efficient payment solutions for future cross-border trade and investment.

International experts warn: stablecoin regulation is still insufficient

According to the Financial Times, 2014 Nobel Prize winner in Economics Jean Tirole warned that global regulation of stablecoins is “insufficient” and that if they collapse during a financial crisis, governments may be forced to inject billions of dollars for a bailout.

Tirole stated that stablecoins may be seen as “absolutely safe deposits” in the eyes of ordinary users, but there are actually risks of loss. If the underlying reserve assets linked to the stablecoin are questioned by the market, it may trigger a run. If the issuer of the stablecoin pursues higher returns, it may invest in higher-risk assets, increasing systemic risk.

He specifically pointed out that using U.S. Treasury bonds as supporting assets for stablecoins may lose attractiveness in the future due to low yields, prompting issuers to turn to high-risk investments.

Industry Prospects and Challenges Coexist

With the implementation of the stablecoin regulatory framework in Hong Kong, the market generally believes that this will provide an opportunity for cost reduction and efficiency enhancement in fintech innovation and cross-border payments. However, inadequate regulation and asset allocation risks remain challenges that must be addressed.

Highlights:

1. Stablecoins, as a tool for cross-border remittances, are expected to drop transaction costs.

2. Blockchain and digital currency technology drive improvements in payment efficiency.

3. Hong Kong is expected to become an important hub for stablecoin and cross-border payment innovations in the Asia-Pacific region.

Potential Risks:

1. The global regulatory standards are inconsistent, posing significant challenges for cross-border compliance.

2. Improper asset allocation by the issuer may lead to a crisis of trust.

3. Systemic Risk in the Context of Financial Crisis

Conclusion

Hong Kong is at the forefront of advancing stablecoin regulation and application, with policymakers and regulatory bodies actively exploring how to use it as an innovative tool for cross-border payments and capital flows. However, warnings from international experts remind us that regulation and risk control must be strengthened simultaneously to ensure financial stability while promoting innovation.