Central bank governors from around the globe are currently in Thailand to discuss the role of central banks amid evolving financial technology. The conference is jointly hosted by the Bank of Thailand (BOT) and the Bank for International Settlements (BIS).
A panel discussion on digitalized monetary systems saw 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 discuss the rise of digital assets and central bank digital currencies (CBDC) and the risks associated with the new technology.
The Hong Kong Monetary Authority chief discussed the innovations and benefits of blockchain technology and its probable impact on central banks. Yue said that in the long term CBDCs and stablecoins can offer a more efficient and cost-effective way of transactions. However, he noted that with any new technology there are certain risks associated with it be it innovation or operational risks.
Yue noted that blockchain is a decentralized technology by nature. Thus, it is far more complicated to mitigate on-chain risks. This is the reason regulators should focus on off-chain activities. He explained:
“We can start with regulating off-chain activities like regulating virtual asset exchanges. Hong Kong will soon introduce not just AML (anti-money laundering) aspect but also investor protection.”
He also revealed that the Hong Kong government is working on separate regulations aligning with international consensus on regulating the stablecoin industry.
Changyong Rhee, governor of the Bank of Korea, was not so optimistic about the future of blockchain technology, especially in the monetary sector, in light of the recent crypto contagions. He said that he was not so sure whether “we are seeing the benefit of this technological development recently,”
“I was more positive before, but after seeing the Luna, Terra, and now the FTX issues. I don't know [if] we will see the real benefit of this new technology, at least for monetary policy,” said Rhee.