On August 1, 2025, Hong Kong’s “Stablecoin Ordinance” will take effect, marking China’s gradual participation in the stablecoin market and its exploration of how to use Hong Kong, an offshore financial center, to promote the internationalization of the RMB through stablecoins. To answer this question, we need to understand, rationally and objectively, the development logic of offshore RMB stablecoins in the context of the current heightened market sentiment.

Just as Labubu, a hot item in short supply not long ago, is losing steam, a new darling―the Japanese anime sensation Chiikawa―is taking centre stage, bearing witness to a typical star succession in action. Trend-following consumers have struggled to get their hands on the Labubu they crave, only to find that fashion now seems to be shifting to Chiikawa.

Commissioned by the Federation of Hong Kong Industries, the “Made by Hong Kong: Strategies for New Industrialisation” study report compiled by us was released last month. In this article, we will highlight relevant sections of the study on the business operations of Hong Kong-invested industrial enterprises (HKIEs) and examine the future of Hong Kong’s industrial sector, providing references for the formulation of the city’s industrial policies.

This paper discusses an analytical model for assessing how customer reviews and price can influence market signalling for experience goods with uncertain quality, especially when there is selection bias. The study reveals that reviews, which often are not neutral but reflect selection bias, may benefit consumers by encouraging lower prices and more effective quality signalling. The model highlights the complex role of review bias and how this bias can enhance market efficiency and welfare through strategic interactions between sellers and consumers.

Mutual funds investing in illiquid corporate bonds actively manage Treasury positions to buffer redemption shocks. This practice can cause flow shocks and cause excess return volatility. Excess return volatility is positively associated with bond fund ownership, and this pattern is more pronounced among funds conducting intensive liquidity management. Evidence suggests the COVID-19 Treasury market turmoil, attributed to intensified liquidity management, was an unintended consequence of the 2017 Liquidity Risk Management Rule.

We have been listening to discussions about Labubu’s innovative marketing and customer engagement, given its global success today. However, how can it shed light on Hong Kong’s RWA economy?

As cryptocurrencies, stablecoins are pegged to another asset, typically the US dollar, another fiat currency, or a financial asset such as gold or the US Treasury bonds. The issuance mechanism of stablecoins is characterized as either centralized or decentralized. The supply of stablecoins relies on reserves held in assets or cryptocurrencies to maintain their value.

Typically issued by private institutions, stablecoins are digital currencies that are pegged one-to-one to a fiat currency or collateralized by a reference asset. Currently, 99% of the world’s stablecoins are backed by the US dollar and US dollar-denominated assets, with USDT and USDC dominating the global market and accounting for a combined circulating supply worth more than US$220 billion.