“Stablecoins can offer a cost-effective alternative outside the traditional financial system and have the potential to revolutionise payment and capital market activities, including cross-border payments,” Chan said in his weekly blog.

“The government and financial regulators will strive to foster a favourable market environment … to encourage issuers to expand stablecoin applications into various scenarios. We aim to help resolve practical pain points for businesses and everyday citizens alike.”

Stablecoins are a type of cryptocurrency backed by a reference asset, usually fiat currencies such as the US dollar and the Hong Kong dollar.

Chan made the pledge after the government unveiled a policy blueprint on new digital assets last week, with the city seeking to cement its role as a global cryptocurrency hub while serving as a test bed for Beijing’s fintech aspirations.