HSBC CEO supports CBDCs while bashing cryptos and stablecoins
- Per Quinn, CBDCs can spur more economic growth by streamlining payments and settlements.
- While bullish on CBDCs, Quinn said they have potential risks that must be addressed.
- Quinn says cryptocurrencies must get some stability before they can be used for payments.
HSBC Group, the largest bank in Europe, has taken a negative stance on cryptos while backing the development of central bank digital currencies (CBDCs). The bank’s CEO, Noel Quinn, wrote an article, in which disclosed the bank’s devotion to supporting the development of a CBDC. Per Quinn, CBDCs work as a transparent legal tender and bypass the risks associated with conventional cryptocurrencies and stablecoins.
Titled New forms of digital money could spur growth, the article details how CBDCs could foster more economic growth by streamlining payments and settlements. Quinn pointed out that CBDCs can also spur innovation across the financial sector. He outlined how the near-instant nature of CBDC transactions helps minimize costs, especially when it comes to issuing and trading bonds, among other securities.
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Quinn also said CBDCs can help improve fiscal and monetary policy goals by offering an avenue to facilitate direct transfers to customers, thus stimulating demand.
CBDCs have a lot to work on
However, he appreciated the fact that there are potential risks even with CBDCs. To this end, he noted that it is vital to ensure that such coins are safe, efficient, transformative. Quinn emphasized that central banks and public authorities should consider the impact CBDCs will have on credit supply, market activity, and financial stability.
He also highlighted that involved entities must meet the data privacy and protection expectations that customers have. On top of this, authorities must minimize financial crime risks and ensure CBDC systems can withstand cyber-attacks. Interoperability is also a concern when it comes to designing CBDCs, according to Quinn.
Moreover, central banks should consider the design of CBDCs before developing such coins. Per Quinn, a hybrid model is the best option because it bypasses the need for central banks to create new account management infrastructure. According to him, a hybrid model would ensure commercial banks continue lending funds.
Cryptocurrencies and stablecoins must be regulated
In the publication, Quinn noted that cryptocurrencies and stablecoins have to be regulated before the general public can rely on them to serve the same purpose as CBDCs. He added that regulation for such assets must match the risks they pose. Quinn also emphasized that cryptos must get some stability and correspond with the current approaches to financial crime mitigation before people consider them a reliable and safe means of payment.
In conclusion, Quinn said HSBC intends to continue working discussing and developing CBDCs. He also revealed that the bank has already partnered with central banks in the UK, France, Canada, Singapore, mainland China, Hong Kong, Thailand, and the UAE, as they explore the feasibility of CBDCs.