The Hong Kong Securities and Futures Professional Association has suggested two unique ideas to revitalize the economy. The first idea is that they will issue ICOs in Hong Kong. It is expected that in the next six months, 10 to 20 companies may issue ICOs. The second idea is that they want to implement Islamic banking by setting up a committee that will oversee Islamic finance guidelines.
Proposal to Implement Islamic Banking in Hong Kong
The proposal to implement Islamic Banking in Hong Kong is unique since the city has only 4.1% Muslim population. Therefore, some features of Islamic finance need to be explained such that the non-Muslim population in the city becomes familiar with the concept. Islamic banking is a kind of financing and banking activity that adheres to Shariah. In this kind of banking, the collection of interest by both investors and lenders is prohibited. Furthermore, it promotes the sharing of profits and losses.
Chen Zhihua’s Opinions on Islamic Banking
The Hong Kong Securities Association President Chen Zhihua has signed a document and sent it to the city’s Financial Secretary, and his deputy. The Association recommends adding more elements such as Islamic finance in investment immigration.
The government and the Securities Regulatory Commission want to promote the implementation of Islamic finance in Hong Kong and urge the SAR government to recognize both Islamic law (Sharia) and Islamic banking. However, the association also clarified that recognition does not mean adoption.
Additionally, the Securities and Finance Commission can invite main stakeholders from the Muslim world to create a committee. The committee will formulate Islamic finance guidelines and have unique Hong Kong characteristics. Licensed companies will then need to alter some provisions of the previous license conditions to deal with Islamic finance.
Furthermore, they need to ensure that licensed companies comply with Islamic guidelines before operating Islamic finance product businesses.
Proposal to Make An Initial Coin Offering (ICO)
The economic condition in Hong Kong is experiencing very slow growth. The exports in the city declined by 15.5% in the first half of 2023. The imports also declined substantially by 13.2%.
Besides witnessing declines in both imports and exports of goods, Hong Kong is also suffering from a trade deficit of US$ 29.6 billion. Thus, these factors have compelled the authorities to find ways to revitalize the falling economy.
Initial Coin Offering (ICO) is one such proposal to revive the declining Hong Kong economy. The authorities are eager to create a comprehensive framework that will be suitable for ICO. It common ways of raising funds for products and services linked with cryptocurrency. Investors can buy an ICO to receive a new cryptocurrency.
However, it will also be a unique step since the age of issuing new crypto coins has ended in 2020 mainly owing to regulatory pressure by different governments in the world. The other reason was the entrance of institutional investors into the cryptocurrency market. It can indeed be a good solution to the economic crisis in Hong Kong as the capitalization of these new crypto coins can be highly beneficial.
Hong Kong is reeling under an economic crisis. The proposals of recognizing Islamic banks and Islamic finance along with ICOs can be a good remedy to the crisis. However, a lot of discussion and a comprehensive framework is necessary as some aspects may not suit the current economic dynamics of Hong Kong. Therefore, it is also praiseworthy that the authorities have proposed these two keeping in mind the unique characteristics of the city.