The Hong Kong Financial Authority (HKMA) has warned that stablecoins might undermine the Hong Kong greenback in a simply launched dialogue paper about its retail central financial institution digital foreign money, e-HKD.
The HKMA at this time issued a dialogue paper, outlining the coverage and design points concerned within the introduction of e-HKD, and encourages the general public and trade to take part within the session and share their views. Discover out extra: https://t.co/GndjuZ2Pay pic.twitter.com/hRz2noD0Ps
— HKMA 香港金融管理局 (@hkmagovhk) April 27, 2022
Many within the crypto trade consider that curiosity in creating central bank-issued digital currencies has been in response to the rise of private-sector stablecoins. This dialogue paper seems to substantiate that view.
“With continued developments in stablecoins, it can’t be dominated out {that a} fashionable stablecoin could finally emerge,” wrote the HKMA as a part of the “e-HKD: A Coverage and Design Perspective” dialogue paper launched on Wednesday.
“In a state of affairs the place using these stablecoins turns into widespread… the position of the home foreign money as the one unit of account could possibly be undermined.”
The authority additionally highlighted dangers that such stablecoins might undermine fee integrity as a consequence of operational or monetary failures, or enable for larger ease of capital flight throughout a monetary disaster interval, which might undermine the management of central banks over the native financial system.
The HKMA first introduced its plans to check a retail-focused central financial institution issued digital foreign money in June 2021 as a part of its “Fintec 2025” technique, nonetheless, the authority has additionally been finding out to deserves of issuing a wholesale CBDC since 2017.
Retail CBDCs are focused towards most of the people and used for on a regular basis transactions. Wholesale CBDCs are issued solely to monetary establishments and are aimed toward making their transactions sooner, cheaper, and safer.
The financial authority has made no dedication to introducing a digital foreign money, with the latest dialogue paper merely inviting trade leaders and customers to offer further suggestions on potential challenges and advantages of the proposed rCBDC.
It additionally asks for suggestions on sure design issues corresponding to an applicable rCBDC issuance mechanism, interoperability throughout large-value and retail fee methods, privateness and information safety, authorized issues, non-public sector participation, and potential use circumstances.
Throughout the border in mainland China, the central bank-issued digital foreign money continues to select up steam. Earlier this month, the Folks’s Financial institution of China (PBOC) mentioned it is going to be increasing its digital yuan trial to 6 extra cities, including to the prevailing 10 main pilot cities already present process trials.
Associated: Becoming the invoice: US Congress eyes e-cash as an alternative choice to CBDC
In the meantime, the Philippines authorities on Wednesday introduced it is going to be pursuing its personal pilot challenge for a wholesale central financial institution digital foreign money, known as Undertaking CBDCPh, which it envisions shall be used for cross-border funds, fairness securities funds, and intraday liquidity services (ILF).
