In a CBDC document, Hong Kong’s authority cautions that altcoins could destabilize the HKD
Hong Kong’s economic regulator is aware of the growing appeal of altcoins, and it is inviting the people to weigh in on the benefits and drawbacks of e-HKD.
In a recently issued consultation document around its retail monetary control cryptocurrency, e-HKD, the Hong Kong Sovereign Currency (HKMA) cautioned that altcoins might weaken the Hong Kong USD.
Many those in the cryptocurrency community think that the development of private-sector altcoins has fueled efforts in improving the banking system in cryptos. This committee report corroborates that perspective.
“With continuing improvements in altcoins, it cannot be considered out that a successful virtual currency may eventually occur,” stated the HKMA in a debate document entitled “e-HKD: A Legal and Technical Viewpoint” released yesterday.
“If the adoption of these altcoins grows popular… the position of the native currency as the only monetary unit may be jeopardized.”
The agency also raised concerns that altcoins might threaten payments fidelity owing to financial or operational problems, or lead to greater accessibility of capital outflows throughout an economic meltdown, undermining the Federal Reserve’s influence over the city’s economy.
The HKMA first declared its intention to investigate a sales reserve bank virtual money in June 2021 as part of its “Fintec 2025” agenda, but the agency has also been researching the benefits of releasing a commercial CBDC since 2017.
Commercial CBDCs are aimed at the overall population and are used for day-to-day activities. Retail CBDCs are really only granted to financial firms and are designed to make their process faster, cheaper, and also safer.
The national currency has taken no guarantee to launch virtual money. One of the most recent conversation documents only encourages industry experts and people to submit the required comment on the possible barriers and effectiveness of the procedure rCBDC.
It also solicits information on specific technology concerns such as an effective rCBDC issuing process, compatibility between huge and retail payment networks, confidentiality management, legal implications, participation of the private sector, and future use applications.
The banking system of virtual money is gaining traction throughout the frontier in Beijing. The People’s Bank of China (PBOC) said early last month that it would extend its electronic yuan experiment to six additional locations and the current ten major pilot areas.
Similarly, the Philippines government has confirmed on Wednesday that it will pursue its own pilot program for a retail monetary control currency, known as Project CBDCPh, that it hopes may be used for bridge payments, equities capital payouts, etc. daily volatility.
