Singapore Central Bank Chief Predicts Exit of Private Cryptocurrencies
Singapore’s central bank chief, Ravi Menon, has made a bold prediction about the future of private cryptocurrencies, stating that those which fail to meet the fundamental tests of financial services will eventually exit the monetary scene. Menon made these comments during a panel discussion on the Future of Monetary System in Hong Kong on Tuesday.
The Future Monetary System
According to Menon, the future monetary system will be comprised of three key components: central bank digital currencies, tokenized bank liabilities, and well-regulated stablecoins. He highlighted the shortcomings of private digital coins, stating that they have failed the test of money as they are unable to retain value and are primarily used for speculative purposes.
The Rise of Stablecoins
In contrast to private cryptocurrencies, regulators are embracing stablecoins that are fully backed by high-quality government securities or cash. Menon emphasized the potential of stablecoins in token form, stating that they can be used for a variety of innovative applications. He also expressed confidence in the potential success of central bank digital currencies if they are able to meet unmet user needs and are implemented using accessible existing technology and infrastructure.
Indian Central Banker’s Perspective
In addition to Menon’s remarks, M. Rajeshwar Rao, a deputy governor at the Reserve Bank of India, shared his perspective on central bank digital currencies. He highlighted the importance of data privacy, cybersecurity, and resilience in ensuring the trustworthiness of CBDCs. Rao also mentioned that the RBI is working on the facilitation of offline transactions and is piloting a CBDC with about 2.75 million participants.
Challenges and Opportunities
Rao also pointed out the need for greater thought on how to implement CBDCs on a multilateral basis, as current initiatives are on a bilateral basis. He sees scope for the expansion of central bank digital currencies to include interbank money market transactions. Both Menon and Rao emphasized the importance of addressing challenges such as data privacy, cybersecurity, and resilience in order to build trust in digital currencies.
In conclusion, the future of the monetary system seems to be moving towards a landscape dominated by well-regulated stablecoins and central bank digital currencies, while private cryptocurrencies are expected to exit the scene if they continue to fail the fundamental tests of financial services.
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