(Bloomberg) — Private cryptocurrencies that fail the fundamental test of financial services will eventually disappear from the monetary scene, according to the governor of Singapore’s central bank.
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Accordingly, the future monetary system will consist of three main components: central bank digital currencies, tokenized bank debt and “well-regulated” stablecoins, Ravi Menon, managing director of the Monetary Authority of Singapore, said in Hong Kong on Tuesday. said in
“Private digital coins have failed the currency test miserably because they cannot hold value,” Menon said during a panel discussion on the future of monetary systems held as part of the Hong Kong Monetary Authority-Bank for International Settlements event. “No one saves their life doing something like this. “People buy and sell these things to make quick money.”
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“I think private cryptocurrencies, the primary digital tokens, will eventually disappear because they do not meet this test,” he said.
In contrast, regulators are moving toward a stablecoin system fully backed by high-quality government securities or cash, allowing stablecoins to be used narrowly like fiat currencies, Menon said. “The beauty is that it is in token form and can be used for a variety of innovative applications.”
Meanwhile, a top Indian central banker said central bank digital currencies would achieve greater success if they address unmet user needs and are implemented using accessible existing technologies and infrastructure.
“Data privacy is an issue. Cybersecurity and resilience are also very important issues to ensure that CBDCs are as trustworthy as fiat currencies,” M. Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, said on the same panel. Regulators are also working to promote offline transactions.
The RBI is one of the few central banks to have launched a CBDC on a pilot basis, with around 2.75 million people participating so far. Rao believes the scope of central bank digital currencies will expand further to include interbank money market transactions.
So far, CBDCs have been quantum-based and more thought needs to be given to how they can be implemented multilaterally in the future, Rao said.
(Updated opinion on stablecoins)
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