HSBC, one of the leading banking firms, has announced its support for a central bank digital currency (CBDC). The bank has announced that it is working with the central banks of eight countries to support their plans to support a CBDC.
An article published by the bank stated that it was working closely with several governments to develop a digital currency that would be developed and controlled by the central bank.
Promote Innovation in the Financial Sector
The CEO of HSBC Group, Noel Quinn, stated that the bank was collaborating with the central banks of Canada, China, France, Hong Kong, Singapore, Thailand, Singapore and the United Arab Emirates (UAE).
HSBC stated that these countries were exploring digital currencies and different ways of boosting innovation in the financial sector.
The bank’s CEO also stated the positive effects of embracing CBDCs. He also mentioned how technology could be used to explore the issuance of government-supported digital currencies.
One of the main areas that Quinn focused on was how CBDCs reduced the costs related to cash handling. With digital currencies, governments can have a more cost-effective way of promoting transactions and promoting efficiency.
Quinn also mentioned how CBDCs could increase the speed at which transactions are processed. Digital currencies can automate transactions and reduce the costs related to bonds. He also stated that CBDCs could help in broadening the monetary policy.
However, in the HSBC article, Quinn supported the hybrid model for the development of CBDCs. With this model, central banks liaise with commercial banks to promote the use and adoption of CBDCs.
“HSBC believes a hybrid model – sometimes called a two-tier model because the CBDC itself is a claim against the central bank, but commercial banks provide the payment services and account management activity – is by far the best design option.”
Major Banks Support CBDCs
HSBC is not the only bank supporting the issuance of CBDCs. The head of the Bank for International Settlements (BIS), Benoit Coeure, has also shown support for the development of CBDCs, and the role that digital currencies can play in the financial sector.
In his speech, Coeure stated that “The financial system is shifting under our feet… the time has passed for central banks to get going.”
The recent remarks by leading banking institutions and financial bodies shed a positive light on the development of CBDCs. It also shows that banks support the move if they are involved in the policy decisions.
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