Ravi Menon, CEO of the Monetary Authority of Singapore (MAS), recently stated underlined the notable transformation in the monetary landscape, highlighting central bank digital currencies (CBDCs), tokenized bank liabilities and regulated stablecoins emerging as key components.
Speaking at an event by the Hong Kong Monetary Authority and the Bank for International Settlements, Menon provided insights into the future of monetary systems, focusing on the evolution and impact of various digital currencies.
Central bank digital currencies gain momentum
During this event, Menon pointed out the shortcomings of “private digital currencies,” pointing out their inability to maintain value consistently.
The MAS director general mainly argued that such currencies “have not passed the money test” as they are rarely used for savings, but rather to make “quick money.”
His statement suggests growing skepticism towards private cryptocurrencies on the part of regulators and other institutions, highlighting their instability and unpredictability as main drawbacks. Meno noted:
Private cryptocurrencies, which are native digital tokens, don’t meet that test, so I think they will eventually leave the scene.
The future of digital currencies, according to Menon, lies in “well-regulated stablecoins” and CBDCs. Menon emphasized that regulators are leaning toward stablecoins backed by “government securities or high-quality cash.” Menon noted that such stablecoins could function as “limited money,” offering the added advantage of tokenization for “innovative applications.”
A contrary view: the current relevance of private cryptocurrencies
While Ravi Menon forecasts a future monetary system dominated by regulated digital currencies, an opposing view underlines the enduring relevance of private, decentralized cryptocurrencies.
Private cryptocurrencies, such as bitcoin and ethereum, differ fundamentally from CBDCs. While CBDCs are digital equivalents of fiat currencies, controlled and regulated by national central banks, cryptocurrencies operate on decentralized blockchain technology.
This framework ensures secure and transparent transactions without centralized oversight, offering a different value proposition than government-regulated digital currencies.
Although crypto-is-a-bad-combo-of-fraud-and-delusion-good-for-kidnappers.html” target=”_blank” rel=”noopener nofollow”>skepticism in some quartersThe growing institutional adoption and growing global recognition of cryptocurrencies indicate their growing importance in the financial ecosystem.
In particular, major institutional investors and even some nations are increasingly adopting these digital assets, suggesting broader acceptance and possible future utility.
For example, the US Securities and Exchange Commission (SEC) reviews multiplebitcoin-etf-products-gensler-2023-10-26/” target=”_blank” rel=”noopener nofollow”> bitcoin Spot ETF requests from renowned financial institutions, including BlackRock, the world’s largest asset manager. This indicates growing interest and legitimization of cryptocurrencies within established financial systems.
Additionally, countries like El Salvador are taking significant steps to integrate cryptocurrencies into their educational curriculum by 2024, further demonstrating the growing influence of private digital currencies in global finance. These developments highlight a growing trend towards recognizing the potential of cryptocurrencies beyond speculation as an integral component of the future financial landscape.
Featured image from Unsplash, chart from TradingView
