Singapore Central Banker Predicts Fade of Private Cryptocurrencies
Ravi Menon, a central banker from Singapore, shared his prediction about the future of private cryptocurrencies during a panel discussion hosted the Hong Kong Monetary Authority and Bank for International Settlements. Menon believes that private cryptocurrencies, lacking inherent value, will likely fade away in the long run.
“Private digital coins have miserably failed the test of money because they can’t keep value,” stated Menon, Managing Director of the Monetary Authority of Singapore. “Nobody keeps their life savings in these things. People buy and sell these things to make a quick buck.”
Future of Monetary Systems
Menon envisions future monetary systems to involve three key components: central bank digital currencies (CBDCs), tokenized commercial bank liabilities, and stringently controlled stablecoins. He believes that future stablecoins fully backed high-quality government bonds or cash could enable innovative applications while maintaining stability, unlike volatile private cryptocurrencies.
Meanwhile, Deputy Governor M. Rajeshwar Rao of the Reserve Bank of India shared a positive outlook on CBDCs meeting unfulfilled user needs employing existing tech infrastructure, while ensuring privacy and security. The RBI seeks to expand the functionality of its CBDC pilot for offline payments. In the long term, Rao suggested considerations around transitioning from bilateral to multilateral CBDC mechanisms between central banks.
Central Bankers’ Preference
The discussions at the panel highlighted central bankers’ preference for regulated digital currencies over privately issued cryptocurrencies in future monetary systems. Menon’s comments reflect his skepticism about the long-term viability of private cryptocurrencies, emphasizing the importance of stability and value in the digital currency landscape.
Ultimately, the views shared Menon and Rao indicate a broader trend among central bankers towards favoring government-backed and regulated digital currencies, as opposed to the volatile and unregulated nature of private cryptocurrencies. As the landscape of digital currencies continues to evolve, the role of central banks in shaping and regulating these systems will be crucial in determining their long-term viability and adoption.
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