• The former head of the Hong Kong central bank, Norman Chan, believes that crypto will not replace traditional finance.
• He suggested that stablecoins have potential applications for investors, but warned that it could affect the efficacy of fiat-based monetary policy.
• He also said that non-fungible tokens (NFTs) had broad application potential in art, wine and antique purchases.
Crypto Won’t Destroy Tradfi: Ex-Hong Kong Central Bank Chief
The former head of the Hong Kong Monetary Authority (HKMA), Norman Chan, has spoken out on the potential impact of cryptocurrencies and decentralized finance (DeFi). In an interview with 21st Century Business Herald, he said that cryptoassets like Bitcoin (BTC) would never become „currencies“ because they lacked intrinsic value and their prices fluctuated too much.
Stablecoins Can Reduce Transaction Costs
Chan acknowledged that stablecoins could reduce transaction costs and improve transaction efficiency. However, he warned against replacing traditional finance with DeFi as investors generally had no protection in this model. He also expressed concern about how adoption of stablecoins could affect the efficacy of fiat-based monetary policy and compromise financial system stability by getting rid of trusted intermediaries.
Non-Fungible Tokens Have Broad Potential
He did not dismiss the potential applications of crypto and Web3 completely though, suggesting that non-fungible tokens (NFTs) had broad application potential for investors looking to make art, wine or antique purchases. He also conceded that stablecoins had great future potential if they met a certain degree of investor protection and regulatory conformity.
Crypto Cannot Beat Traditional Finance
Despite this optimism for some aspects of cryptocurrency technology, Chen still maintained his stance on its limitations – namely that it could never replace central banks or traditional financial markets and institutions due to price volatility holding back progress for many cryptoassets.
Hong Kong Testing Digital Yuan Cross-Border Functionality
Before serving as HKMA’s Chief Executive from 2009 to 2019 Chan worked as the Regional Vice Chairman at Standard Chartered Bank. Currently Hong Kong is working with Beijing’s People’s Bank Of China to test „cross border“ functionality for its digital yuan project.