The largest European Bank, HSBC has total assets of $3 trillion, yet it maintains a skeptical stance where cryptocurrencies are concerned and is in favor of the development of CBDCs i.e. central bank digital currencies. Noel Quinn, the chief executive of HSBC Group, wrote an article with the title ‘New forms of digital money could spur growth’. In the said article, he highlighted their commitment to support the idea of a CBDC because it offers transparent legal tender that can help in avoiding many risks that are associated with stablecoins as well as cryptocurrencies. The piece was released on Tuesday and it argues that global CBDC efforts, such as the Chinese digital yuan are what makes the new form of digital money.
Stablecoins, on the other hand, are a form of private money and nothing new. Quinn said that the currency money of commercial banks is created privately and used widely, but central bank money closely anchors this commercial bank money and closely regulates it, thereby highlighting its systemic importance. The chief executive went on to add that cryptocurrencies and stablecoins will need regulation, which has to be equivalent to the degree of associated risks because the adoption of the industry will continue to grow.
He added that even then, only those designs could be used as a safe and reliable means of payment that are well anchored sufficiently for achieving price stability and also correspond with the existing approaches used for prevention of financial crime. Quinn expressed his skepticism over cryptocurrencies and added that HSBC would continue to develop the experience of cross-border payments and development of CBDCs globally. He also noted that they had been actively working with numerous central banks, which include the ones in France, mainland China, United Kingdom, Singapore, Thailand, Hong Kong and the United Arab Emirates for contributing to their respective CBDC projects.
HSBC is one of the largest banking institutions in the world and is reported one of the biggest debt purchasers of troubled real estate developer in China, Evergrande, along with BlackRock, the investment giant. While BlackRock has been moving towards the crypto space actively, HSBC remains one of the biggest skeptics of the crypto industry as well as Bitcoin. In August, it was on the list of banks that decided to eliminate their payment channels to Binance, leading crypto exchange, due to concerns over the possible risks for its clientele.
Previously, HSBC had also blacklisted the stock of MicroStrategy, as part of its user policy that prohibits its customers from engaging in the crypto industry. The CEO’s remarks come at a time when financial regulators around the globe are scrutinizing private stablecoins. Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC) called for tougher regulation of crypto on Tuesday. He referred to stablecoins as ‘poker chips’ at the crypto casino, which indicates their risk. However, it should be noted that Gensler is not against cryptocurrencies in general and has a positive view regarding these digital currencies.