Crypto Won’t Destroy Tradfi, Ex-HK Central Bank Chief Says

• The former head of the Hong Kong central bank, Norman Chan, believes that crypto will not destroy traditional finance.
• He states Bitcoin cannot become a currency due to its volatile price and lack of intrinsic value.
• He also warns that stablecoin adoption could affect the efficacy of fiat-based monetary policy.

Crypto Won’t Destroy Tradfi, Says Ex-Hong Kong Central Bank Chief

The former head of the Hong Kong central bank says that crypto will not destroy traditional finance – and that volatility will hold back the progress of many cryptoassets.

Bitcoin Cannot Become “Currency”

Norman Chan, the former Chief Executive of the Hong Kong Monetary Authority (HKMA), was speaking in an interview with the 21st Century Business Herald. Chen said cryptoassets like bitcoin (BTC) could never become “currencies” because they “have no intrinsic value and their prices fluctuate too much.”

“Bitcoin can be used for speculation, but it does not meet the requirements [of a currency],” he stated.

Stablecoins Inferior to Centralized Models

He also took aim at stablecoins, saying:”[Stablecoins] have many application scenarios. They can reduce transaction costs and improve transaction efficiency. But they cannot subvert and replace traditional finance.” He explained that decentralized finance (DeFi), too, was inferior to centralized models as in the DeFi world, investors “generally have no protection.” He warned that stablecoin adoption could “affect the efficacy of fiat-based monetary policy.”And, he said, this would compromise the stability of the financial system by “getting rid of the models of regulation and trusted intermediaries.”

Futuer Potential for Stablecoins & NFTs

Chen did not totally dismiss the potential of crypto and Web3, however.He conceded that “stablecoins have great future potential, provided that they meet a certain degree of investor protection and regulatory conformity.”The former HKMA boss also suggested that non-fungible tokens (NFTs) had “broad” application potential for investors. He said this was particularly true for those looking to make art, wine or antique purchases.

No Replacing Central Banks & Traditional Finance

But he dismissed any notion that crypto had enough power to “replace central banks, traditional financial markets and institutions,” claiming price volatility would prove an Achilles heel for BTC and major altcoins.

Background Information on Norman Chan

Chan served as the HKMA’s Chief Executive from 2009 to 2019. Before this he worked as Regional Vice-Chairman at banking giant Standard Chartered. Currently Hong Kong is working with Beijing’s People’s Bank of China on testing cross-border functionality for digital yuan.