HSBC says it supports CBDC with settlements
Banking and financial institution HSBC has spoken out in favor of central bank digital currencies (CBDCs), according to a company news article, adding that they must be handled safely with regulation.
CBDCs, which are currently under development or under discussion in many countries, will need to be closely monitored for risk, writes HSBC Group Managing Director Noel Quinn in the article, in order for things to be also transformative and secure.
For example, HSBC believes central banks will need to consider whether CBDCs could have a negative effect on credit supply, market activity and financial stability, and that CBDCs will need to rise to the challenge on topics such as data confidentiality and ensure that it can withstand cyber attacks.
CBDCs could be useful in spurring new growth, Quinn wrote, as they would help make payments cheaper and easier. Since they have a “near instantaneous nature”, they could help reduce the costs of issuing and trading bonds as well as other securities.
According to the company, a hybrid model would be the best way to go about this, as it would eliminate the need for central banks to create a whole new infrastructure for the accounts.
It will also ensure that commercial banks can continue to play a role in the economy.
HSBC also notes that interoperability will be key to the proper functioning of CBDCs. HSBC postulates that common standards for infrastructure and data, developed under the Group of 20 cross-border payment rules, will help ensure that CBDCs can be used internationally and achieve more global use. .
Read also : BIS official urges central banks to embrace digital currency
In other CBDC news, the head of the Bank for International Settlements innovation hub said countries that did not look into CBDCs risked being left behind.
Benoit Coeure, a former European Central Bank official, said CBDCs were more urgent because it will take them “years” to debut as opposed to stablecoins or crypto assets, which are already there.