Singapore central bank chief says private cryptocurrencies fail the test for fundamental financial services

Private cryptocurrencies have failed the test for fundamental financial services and will not linger in the monetary space. The view was voiced by the head of the MAS Ravi Menon, according to Bloomberg.

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During a panel discussion at an event in Hong Kong, the managing director of the Singapore central bank named three key components of the future monetary and financial system:

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• CBDC;

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• tokenised bank obligations;

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• “well-regulated” stablecoins.

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According to Menon, private digital currencies have completely failed the test as money:

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\”No one stores their savings in these assets. People buy and sell them to make quick dollars.\”

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He noted that regulators, by contrast, are moving toward creating a system of stablecoins backed by government securities or fiat currencies, which would enable the money supply to be used in the narrow sense.

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\”The advantage is that these are tokens and they can be used for a range of innovative applications,\” emphasized Menon.

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In turn, his counterpart from the Reserve Bank of India forecast CBDC success. It will occur if digital assets meet users’ unmet needs, based on available infrastructure, said deputy governor M. Rajeshwar Rao.

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The financier also pointed to a number of problems:

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\”Data privacy is a concern. Cybersecurity and resilience are also critical issues that we must address so that CBDC can be trusted as much as cash.\”

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Earlier in July, the RBI was in talks on using the digital rupee with at least 18 countries.

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MAS in August completed work on the regulatory framework for stablecoins.