China is holding a large foreign reserve in US dollar. However, China has no control over US monetary policies. By buying Lykke-Coins with its US$ reserve and Renminbi, it shares its risk with everyone else. The world will gain in economic stability.
China has around US$4Trillion foreign reserve in US dollars. However, China has no control over US monetary policies. According to the Economist ('Dominant and dangerous', 3 October 2015): "As a means of payment, a store of value and a reserve asset, nothing can touch [the US dollar]. Yet the dollar’s rule has brittle foundations, and the system it underpins is unstable."
Instead of holding US$, of which China has no control, it is better for China to hold a currency which is a level playing field for all. China could convert its US$ reserve to a crypto currency. Lykke is building a clearance platform for trading. Therefore, Lykke-coin is potentially a good currency for China to hold.
China will back Lykke-Coins by buying Lykke-Coins with US$ and Renminbi with its reserve. That means Lykke will hold a large amount of US$ and Renminbi, which allows Lykke to guarantee conversion from Lykke coins to "real" currencies such as Renminbi and US dollars.
Creditability:
China will get protection against its US$ reserve: China is holding on the world's biggest reserve in US$, but it has no control over US monetary policy. By converting this reserve to Lykke-Coins, any risk associated to its US$ reserve will be shared by the whole community that trades with Lykke-Coins.
Lykke would become a big clearance house. By trading with Lykke-Coins, the world would be less dependent on a single currency. According to the Economist, "about 60% of the world’s output, and a similar share of the planet’s people, lie within a de facto dollar zone". The world will gain in economic stability.
Lykke gets the backing of a lot of cash backing.
China is the world’s second biggest economist with enormous trade volume.
If China clears its trades with Lykke, which it should if it is holding Lykke-Coins, Lykke will have a big circulation.
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