HSBC chief backs CBDC and criticises cryptocurrencies

HSBC chief Noel Quinn emphasised the institution’s commitment to developing central bank digital currency (CBDC) and noted “the numerous risks posed by cryptocurrencies.”

In the article New forms of digital money could spur growth he wrote:

“CBDCs are a legitimate means of payment, backed by a central bank or government authority. This means they are transparent and stable, reducing many of the risks associated with other forms of digital money, especially cryptocurrencies and some stablecoins.”

Among the advantages of CBDCs is the potential to stimulate economic demand by boosting efficiency and lowering payment costs.

In his view, CBDCs are the “new form of digital money”, while private cryptocurrencies “do not represent anything new”.

“Commercial bank money is created and widely used privately. But these assets are tied to central bank money and are strictly regulated, which reflects their systemic importance,” he explained.

The HSBC chief noted that the reliability of private coins can be ensured only if the applicable rules are commensurate with the risks investors face. But even this does not guarantee their longevity, he added.

Quinn confirmed HSBC’s involvement in programmes to develop CNBC of several central banks, including regulators in the UK, France, Canada, Singapore, Mainland China, Hong Kong, Thailand and the UAE.

Earlier in 2021, the HSBC CEO said that the bank does not view bitcoin as an asset class and does not plan to offer clients cryptocurrency trading.

In April the conglomerate blocked the purchase of MicroStrategy shares, which had actively invested its own and borrowed capital in Bitcoin. The decision affected clients of the InvestDirect online platform.

“The HSBC InvestDirect platform will not participate in the purchase and exchange of products related to virtual currencies,” was stated in a notice to clients.