Express
HSBC: Hong Kong Dollar Stablecoin Will Not Affect Linked Exchange Rate System in Hong Kong
Summary: According to reports from the Hong Kong Economic Times, a research report released by HSBC stated that even with the growth in supply of the Hong Kong dollar stablecoin, it will not have an impact on the linked exchange rate system. This is because for every Hong Kong dollar stablecoin created, the stablecoin issuer needs ...
According to reports from the Hong Kong Economic Times, a research report released by HSBC stated that even with the growth in supply of the Hong Kong dollar stablecoin, it will not have an impact on the linked exchange rate system. This is because for every Hong Kong dollar stablecoin created, the stablecoin issuer needs to hold reserves. If the reserves are held in Hong Kong dollars, issuing stablecoins simply transfers Hong Kong dollars from the buyer's wallet to the issuer's reserves, without changing the total amount of Hong Kong dollars in the system. HSBC analysis suggests that Hong Kong stablecoin issuers can hold some reserves in the form of highly liquid foreign currency assets such as US dollars. Although this situation may affect the exchange of Hong Kong dollars for US dollars, it is not fundamentally different from other outflows of Hong Kong dollars. If the Hong Kong dollar to US dollar exchange rate falls to 7.85, the Hong Kong Monetary Authority will intervene by buying Hong Kong dollars. Conversely, if the market buys a large amount of Hong Kong dollar stablecoins, the Hong Kong Monetary Authority will sell Hong Kong dollars to maintain the exchange rate at 7.75.
Tags:
Link: HSBC: Hong Kong Dollar Stablecoin Will Not Affect Linked Exchange Rate System in Hong Kong [Copy]
