Reports out today highlight a new stance from Hong Kong with regards to the Central Banks position on the production of a centralised digital currency. As we know, various countries are weighing this up as an option, with England and South Korea latest to jump on the list. The idea of a centralised digital currency is pretty simple. It would allow the central bank to utilise a blockchain based currency system that can be issued as a stable coin and seen as a sovereign currency within the banks remit, it sounds easy to establish but it would no doubt have quite large scale economic implications, moreover, the banks have to consider how the general population would respond to it.
Now, according to CCN, the Hong Kong Monetary Authority (HKMA) considered to be Hong Kong’s Central Bank have now stated that, in light of their recent research, they will not be producing a centralised digital currency any time soon. According to CCN, an official from HKMA has spoken at a Legislative Council meeting, stating that:
“The HKMA has carried out research on CBDC. At the same time, the HKMA notes that the benefits of CBDC and its efficiency gains will depend on the actual circumstances of a jurisdiction. In the context of Hong Kong, the already efficient payment infrastructure and services make CBDC a less attractive proposition. The HKMA has no plan to issue CBDC at this stage but will continue to monitor the international development.”
See the full CCN report for yourself, here-
Essentially, within this the HKMA seem to believe that as it stands the financial system in Hong Kong would not benefit from a digital currency, on the premise that the current system is already strong enough on its own. At the end of the day, in order for a central bank to invest in such a project, it needs to have huge benefits. Overall, one such benefit is the restoration of a collapsed or broken financial system. With the Hong Kong system currently looking very healthy, this is one benefit the HKMA are not chasing after.
With all of this in mind though, it does look as if the HKMA are open to this changing and thus, therefore, we should expect their research in the area to continue.
None of this means that Hong Kong are writing off cryptocurrencies, in fact, it’s the opposite, it provides evidence that authorities within Hong Kong are investing time, money and moreover, effort into this growing industry. This is good news indeed.