• Former head of the Hong Kong central bank Norman Chan believes that crypto will not destroy traditional finance.
• He claims that cryptos like bitcoin cannot become „currencies“ because they lack intrinsic value and volatility.
• Additionally, he suggests that stablecoins have great potential, but non-fungible tokens (NFTs) are better for investors making art, wine, or antique purchases.
Crypto Cannot Destroy Traditional Finance: Ex-Hong Kong Central Bank Chief
The former head of the Hong Kong central bank, Norman Chan, has stated that crypto will not destroy traditional finance due to its high level of volatility. He argues that cryptoassets such as Bitcoin (BTC) can never become “currencies” as they have no intrinsic value and their prices fluctuate too much.
Stablecoins Unlikely to Replace Traditional Finance
Chan suggested that stablecoins could reduce transaction costs and improve efficiency; however, he also warned that their adoption could affect the efficacy of fiat-based monetary policy which could lead to the destabilization of the financial system if it gets rid of trusted intermediaries and their regulations.
Future Potential for Stablecoins
Despite this warning about instability, Chan conceded that “stablecoins have great future potential” provided they meet a certain degree of investor protection and regulatory conformity.
Non-Fungible Tokens (NFTs)
Chan also suggested NFTs as having broad application potential especially for those looking to make art, wine or antique purchases.
Digital Yuan Tested by Beijing People’s Bank
Hong Kong is currently testing the ‘cross-border’ functionality of Beijing’s digital yuan in collaboration with the People’s Bank of China.