HSBC Says it Supports CBDC with Regulations

Banking and financial institution HSBC has come out in support of central bank digital currencies (CBDCs), a company insight article says, adding that they must be handled safely with regulations.

CBDCs, which are currently being developed or discussed in numerous countries, will need to be closely monitored for risks, HSBC Group Chief Executive Noel Quinn writes in the article, so that things are as transformative and safe.

For example, HSBC thinks central banks will have to look at whether CBDCs could have an adverse effect on the supply of credit, market activity and financial stability, and that CBDCs will have to rise to the challenge on things like data privacy and making sure they can withstand cyber attacks.

CBDCs could be good for spurring new growth, Quinn wrote, as they’d add to the ways payments can be made cheaper and easier. As they have a “near instant nature,” they could help cut down on costs for issuing and trading bonds as well as other securities.

According to the company, a hybrid model would be the best way to go about them, as this would do away with the need for central banks to make a whole new infrastructure for accounts.

It will also make sure that commercial banks can keep playing a role in the economy.

HSBC also notes that interoperability will be the key to making CBDCs work. HSBC posits that common standards for infrastructure and data, developed within the Group of 20’s cross-border payment rules, will help make it so that CBDCs can be used internationally and get more usage overall.

Also read: BIS Official Urges Central Banks to Adopt Digital Currency

In other CBDC news, the head of the Bank for International Settlements’ Innovation Hub has said those countries not looking into CBDCs will be at risk of being left behind.

Benoit Coeure, a former European Central Bank official, said CBDCs had more urgency because they’ll take “years” to debut as opposed to stablecoins or crypto assets, which are already here.