Financial Secretary Paul Chan on Monday said Hong Kong must safeguard its financial and cyber security amid rising geopolitical risks and fierce global competition.

He made the comments ahead of the 11th National Security Education Day on Wednesday — themed “Proactively Align with the 15th Five-Year Plan, Follow a Holistic Approach to Development and Security."

Speaking to a local newspaper, Chan noted the SAR government and financial regulators had already set up a round-the-clock, cross-market supervision system to monitor over-the-counter transactions, and ensure the stable operation of the markets.

He added the city must also establish a robust system to guard against cybersecurity risks.

"Whether it's finance or the internet, these are wars without guns, bombs, or smoke that have a profound impact on various aspects of society, the economy and people's livelihood," he said.

"So we are all highly vigilant in this regard, and have set up specialised teams in relevant government departments to ensure the safety management in these areas," he added.

Separately, Chan noted authorities are taking "small but quick steps" when it comes to granting licences to stablecoin issuers, as regulators must also manage risks such as those related to money laundering.

A stablecoin is a type of cryptocurrency that maintains a steady value by being pegged to a reference asset, typically fiat currencies such as the US dollar or commodities such as gold.

He noted that while only "a small number" of such licences were issued last Friday, authorities would grant the second batch of licences after gaining "lessons and experiences" following more practical uses of stablecoins in the future.

Last Friday, the Hong Kong Monetary Authority issued two such licences to HSBC and Anchorpoint Financial, a joint venture backed by Standard Chartered, among 36 applications.

Chan said that such "innovative" digital assets, which champion decentralisation and efficiency, serve "merely as a payment tool, and not as an investment tool".

He also said the issuance of the stablecoin licences, in accordance with the Stablecoin Ordinance, marked a "solid example" of the city balancing security and innovation, after long serving as a "testing ground" for the country when it presses ahead with reforms and opening up.

Looking ahead, the finance minister said the SAR must work to enhance its competitiveness and influence in the global financial markets, citing "the best defence is also offence".



Edited by Tony Sabine