Chinese officials offered a regional stablecoin backed by four major Asian currencies. The proposed digital currency is aimed at trade promotion between China, Japan and Korea.

Cross-border currency

Shen Nanpeng, a member of the Chinese People's Political Advisory Conference and global managing partner of Sequoia Capital, proposed the digital currency at a national session Thursday (May 21st). The stablecoin in question; It will be backed by many currencies including the Japanese Yen, Korean Won, Chinese Yuan and Hong Kong Dollar.

Although currencies are not explicitly built on a blockchain and technically not a cryptocurrency; such digital currencies are often compared to stablecoins like Tether and USDC. Like Stablecoins, it supports price parity with the support of a national digital currency.

Purpose of Stablecoin

The proposed stablecoin aims to facilitate cross-border transactions in the region. The proposal will reduce currency conversion costs and serve as an example for other national digital currencies. Stablecoin said it will also help the economic recovery by encouraging trade after the COVID-19 crisis.

China's digital money studies

This currency looks different from China's central bank digital currency (CBDC), which has been in development since 2017. China Central Bank, which is on the agenda with its efforts to create CBDC, is seen as a potential supervisor and collaborator for the regional stablecoin project.

The report sees these currencies as a "test" for China's CBDC and states that stablecoin will "connect seamlessly" to CBDC. In either case, it will take time to create a new digital currency.

In the early stages, the groups will test stablecoin in a regulatory "virtual environment", establish a tracking system and improve cooperation between Hong Kong and China.