The Bank of International Settlements (BIS) and the Bank of Thailand (BOT) have together organized a global conference in Thailand. The conference is witnessing central bank governors from across the world discuss the role of central banks amid evolving financial technology.
Under the agenda, the central bankers, including Eddie Yue, chief executive of the Hong Kong Monetary Authority; Changyong Rhee, governor of the Bank of Korea; Adrian Orr, governor of the Reserve Bank of New Zealand and Cecilia Skingsley from Bank for International Settlements participated in a panel discussion on digitized monetary systems.
The regulators discussed and scrutinized the surge of digital assets and the central bank’s digital currencies, as well as the risks associated with integrating and adopting new technology.
There has been a positive outlook on blockchain technology and its benefits on the central banks from Hong Kong’s financial regulator. Yue discussed the long-term potential that CBDCs and stablecoins hold in offering a more productive and cost-efficient mode of transaction.
However, he also acknowledged the risk associated with any new technology, whether around operational costs or development.
Further, Yue highlighted that regulators should focus on off-chain activities. He said that the blockchain inherently is a decentralized technology, and so far, it has been challenging to assess on-chain risks.
Elaborating on the subject further, he said the regulators can start by regulating on-chain activities like virtual asset exchanges. Hong Kong also plans to consider a more comprehensive outlook and count on investor protection. Yue revealed the nation’s intention to launch a framework for investor protection alongside anti-money laundering (AML).
“We can start with regulating off-chain activities like regulating virtual asset exchanges. Hong Kong will soon introduce both AML (anti-money laundering) and investor protection.”
According to Yue, the government is also looking forward to working on different regulations that would align with the standard international concord regarding the regulation of stablecoins.
However, all the regulators were not equally optimistic about digital assets. Changyong Rhee, the financial regulator of Korea, seemed hesitant regarding the future of blockchain technology and precisely in the financial sector, given the recent crypto contagions.
“I don’t know(if)we will see the real benefit of this new technology, at least for monetary policy.”
He mentioned that initially that he was more optimistic about blockchain technology, but the recent collapses of big industry names have brought him into a confused space.
Hong Kong wishes to bring back the fintech investments in the nation that had left due to the stringent regulations. In October, Elizabeth Wong, Director of licensing and head of the fintech unit of Hong Kong’s Securities and Futures Commission (SFC), asked the lawmakers to establish a bill to regulate cryptocurrencies. She also revealed that the commission had relaxed to allow retail investors to invest in crypto assets over the past year.
In November, the country’s financial secretary released a notification announcing the issuance of government green bonds to begin by the year’s end.