Hong Kong Central Bank: “Cryptocurrencies are likely to be important for the future financial system”


The CEO of the Hong Kong Monetary Authority (HKMA), Eddie Yue, has stated that despite the shortcomings in the cryptocurrency industryindustry is likely to play a central role in future financial systems.

Speaking during the G20 financial officials meeting, Yue noted that the technology that powers most cryptocurrency projects could be adapted to fit the broader financial system, reported Reuters on July 17.

However, Yue called for regulation of the sector to avoid related risks such as recent collapse of the Terra ecosystem (LUNA) which resulted in significant losses.

“Despite the Terra-Luna incident, I believe that cryptocurrencies and DeFi will not go away, although they could be delayed, because the technology and business innovation behind these developments are likely to be important to our future financial system,” Yue said.

Hong Kong embraces the benefits of cryptocurrencies

Yue’s sentiments align with HKMA’s longstanding friendly approach to cryptocurrencies. In January 2022, the institution issued a statement indicating that the entity is open to reaping the benefits of financial innovation while recognizing the risks involved.

The institution has recently focused more on stablecoin regulations, especially after the fall of the Terra ecosystem.

In the recent discussion paper statement on its central bank retail digital currency (CBDC), e-HKD, HKMA warned that stablecoins could undermine the country’s dollar.

HKMA noted that if a single stablecoin becomes more popular, the local currency will be significantly undermined.

Additionally, during the G20 session, Australia’s central bank Governor Philip Lowe expressed his support for privately issued cryptocurrencies only in a well-regulated environment. According to Lowe, private cryptocurrencies could be better than CBDCs.

“If these tokens are going to be widely used by the community, they will need to be state-backed or regulated just like we regulate bank deposits,” Lowe said.

Both Australia and Hong Kong are among the countries leading the charge towards a standard crypto regulatory framework.

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