Today at the SIBOS banking conference, Ulrich Bindseil of the European Central Bank (ECB) said that Bitcoin as an efficient payment instrument is an illusion and painted a picture of what a digital currency could look like central bank (CBDC) in five years. Meanwhile, the Hong Kong Monetary Authority (HKMA) did not specify a timeline, but hinted it could be as early as three years.
During the conference, Bindseil, the managing director of market infrastructure and payments, previously said that one of the main reasons that cross-border payments had not progressed despite technological advancements was in part due to the risk reduction for banks.
He switched to Bitcoin and its “illusion” of efficient cross-border payments due to a lack of compliance.
“The fact that it (Bitcoin) appears competitive in cross-border payments is simply due to regulatory arbitrage and is not sustainable. Of course, the public sector should look into this and close this regulatory arbitrage gap as quickly as possible. And then also this illusion of Bitcoin as an efficient means of cross-border payment will quickly disappear for sure, ”said Bindseil.
Georges Elhedery of HSBC, co-CEO of Banks and Markets, also called for action. “Decentralized finance is a reality. It’s happening there, ”Elhedery said. “As a regulated entity, we do not intend to operate in a totally unregulated space. Therefore, we call on our central bank and regulators to consider ensuring that these stablecoins and other types of crypto are regulated according to the risks they pose. And he set about making a long list of risks.
Meanwhile, the CEO of the ECB has switched to global stablecoins, saying the reason for the slowdown in their deployment is that they are also “facing regulatory realities that apply to banks and others. service providers for a long time ”.
Speaking of a potential central bank digital currency (CBDC), the ECB’s Bindseil was keen to manage expectations. Initially, he referred to a timeframe of five to six years, after which the request would likely be purely for domestic retail payments.
“Other things like programmable payments, offline payments, cross-border payments, international interoperability, these are all things we need to keep in mind now, be prepared to have them eventually. We’ll see, ”Bindseil said.
“But we can’t, I think, load it all up and say that in five years too we will solve the cross-border payment problems necessarily with a CBDC. It’s more of a medium-term objective.
Howard Lee, Deputy Managing Director of HKMA, also spoke about CBDCs. “You don’t know if it’s three years, five years or later. But it’s something that no one can really ignore, ”said Lee.
Emphasizing his personal opinion, Lee sees the most possibilities for a wholesale CBDC, which would allow payment-for-payment (PvP) transactions to settle digital assets. In his opinion, this would stimulate financial innovation. Lee also pointed out that work is underway with the BIS on the wholesale and retail CBDC fronts.
Although Lee did not go into specifics, Hong Kong is part of the m-CBDC bridge wholesale project that started with Thailand and Hong Kong and now includes BRI, China and the United Arab Emirates. The Hong Kong and Thailand stock exchanges as well as 30 commercial banks are expected to participate in the trials.