Even with the massive influx of institutional capital into the cryptocurrency market, many mainstream financial institutions have continued to be wary of this asset class. Europe’s largest bank, HSBC, joined their ranks as its CEO reiterated his skeptical stance on crypto even as he expressed his enthusiasm for CBDCs.
HSBC Group CEO Noel Quinn recently wrote an article titled “New Forms of Digital Currency Could Drive Growth”. In the article, he highlighted the bank’s commitment to supporting and developing the concept of CBDC and the “many risks” that cryptocurrencies carry. He said,
“CBDCs are legal tender backed by a central bank or government authority, which means they are transparent and stable – avoiding many of the risks associated with other forms of digital currency, especially cryptocurrencies and some stable coins. “
Other merits of CBDCs like those developed by China include their potential to “stimulate economic growth” by making payments cheaper and more efficient while stimulating innovation in the economic sector. He further added that,
“The near instantaneous nature of CBDC payments is likely to reduce the cost of issuing and trading bonds and other securities – and can also help meet fiscal and monetary policy goals by providing a means of make direct transfers to consumers to stimulate demand. “
In said article, he also argued that the CBDCs currently in development across the world are the “new form of digital currency”. He then called other forms of digital currency such as cryptocurrencies and stablecoins which are private in nature “nothing new”, explaining,
“The current currency of commercial banks is privately created and widely used. But commercial bank money is anchored in central bank money and tightly regulated, reflecting its systemic importance. “
Therefore, wrote the CEO of the HSBC Group, the reliability of these coins can only be guaranteed if the regulations around them are matched with the risks to which their investors are subject as adoption continues to grow. However, that may not be enough to ensure longevity either, as he added,
“Even then, only designs that are sufficiently entrenched to ensure price stability and that correspond to current approaches to financial crime prevention are likely to be useful as a reliable and secure means of payment.”
Even though the banker remained skeptical of cryptocurrencies, he did not hold back his support for CBDCs. He reiterated HSBC’s involvement in the development of these currencies, noting that the bank was already working with many central banks, including those of the UK, France, Canada, Singapore, Mainland China, Hong Kong. , Thailand and the United Arab Emirates, to contribute to their CBDC projects.
HSBC, which has a total asset value of over $ 3 trillion, has long been an adversary of the cryptocurrency market. The bank has a usage policy in place that prohibits customers from interacting with cryptocurrencies. As a result of this policy, he would have blocked customer access to MicroStrategy shares because the business intelligence company has invested heavily in Bitcoin. In addition, he had cut payment channels to Binance last month over “concerns about possible risks” to its clients.