By George Ward
The governor of the Korean central bank has worries in the wake of the recent FTX disaster. However, an executive director of the Hong Kong central bank appeared hopeful about the future of decentralized technology.
Governors of central banks worldwide are presently in a meeting in Thailand. This meeting will discuss central banks’ role in this emerging financial technology.
The conference is hosted by the Bank of International Settlements (BIS) and the Bank of Thailand (BOT).
Concerns About The Risks Crypto Poses
The Hong Kong Monetary Authority’s Eddie Yue, the Bank of Korea’s Changyong Rhee, the Bank for International Settlements’ Cecilia Skingsley, and the Reserve Bank of New Zealand’s Adrian Orr took part in a panel discussion on digitalized financial markets. They discussed the increasing adoption of digital assets.
The governor also discussed the CBDC (the central bank digital currency) with particular attention to all the risks that this emerging technology poses. However, the chief of Hong Kong’s monetary authority, Donald Chen, threw in some points to back up his optimism.
Chen discussed the benefits of these innovations, referring to blockchain technology and its impact on the operations of central banks worldwide. Yue mentioned the long-term benefits CBDCs and other stablecoins offers, including low transaction costs.
He pointed out that any new technology comes with some risks, whether they are related to innovation or operational concerns. Yue remarked that blockchain technology is a decentralized technology.
However, it is challenging to reduce the occurrence of an on-chain risk. These risks should be the primary concern of regulators around the world. The chief said that the central banks could begin by regulating off-chain activities.
Such activities include the regulation of the activities of virtual asset providers. He noted that Hong Kong would introduce investor protection to complement its anti-money laundering (AML) policies.
Chen added that the Hong Kong government is developing unique legislation in line with the global authorities’ regulation of the stablecoin sector.
The governor of the Korea Central Bank, Changyong Rhee, was not optimistic about the future of the emerging blockchain technology, especially in terms of using it for financial settlements. He cited the recent disasters in the crypto industry to buttress his points.
Rhee’s remarks show his doubt about the benefits of the crypto industry, given recent bad happenings in the industry. The stance of Korea’s Central Bank governor must have been influenced by the crash of the Terra network in May this year, the current FTX collapse and their contagion effects.