If there is a stablecoin backed by every currency in the world then what would be the difference between fiat and crypto that too stable cryptos which are already in place? These coins would be infinitely minted just like any other countries fiat and we would have all of them to deal with. It seems like a very nice idea where people can directly deposit their own fiat and buy that stable coin to trade with other crypto but there are problems in the interconversion of coins.

Again why would a country want its traditional currency into crypto stable currency? They can just declare it "illegal" and you are going out of business. You may find some specific use cases of this project but not so on a large scale.