The retiring MAS director believes the future monetary system will revolve around CBDCs, tokenized bank liabilities, and stablecoins.
The Director of the Monetary Authority of Singapore (MAS), Ravi Menon, has emphasized that private cryptocurrencies have no future. Menon shared his thoughts as a panelist at an event jointly hosted by the Hong Kong Monetary Authority and the Bank for International Settlements.
Earlier, Mr Menon, who spearheaded the fintech revolution in Singapore, announced his plans to retire after thirteen years on the post. Despite his experience, the retiring MAS director affirms private cryptocurrencies will eventually fade off the financial scene.
According to Menon, privately issued assets have repeatedly failed the test of money due to their inability to store value.
“They have performed poorly as a medium of exchange or store of value. Their prices are subject to sharp speculative swings, and many investors in these cryptocurrencies have suffered significant losses,” he said.
Menon explained that people see private crypto assets as tools for quick profits. This stands in contrast with a store of value that people can put their life savings in. Consequently, Menon asserts that these private digital tokens are not the way forward.
CBDCS, Stablecoins, and Tokenized Bank Liabilities are the Future of Money
Instead of focusing on private cryptocurrencies, the retiring MAS director believes the future monetary system will revolve around CBDCs, tokenized bank liabilities, and stablecoins.
“Stablecoins, if well-regulated, can potentially play a useful role as digital money alongside CBDCs and tokenised bank liabilities,” he says.
While CBDCs are digital currencies issued by a country’s central bank on the blockchain, tokenized bank liabilities represent customers’ claims on a bank’s balance sheets. Stablecoins are cryptocurrencies whose market value is pegged to a more stable reference asset.
Deputy Governor of the Reserve Bank of India (RBI), Rajeshwar Rao, also expressed optimism about the potential of CBDCs. Rao also highlighted the critical role of cybersecurity and resilient systems if CBDCs will gain public trust.
The Need for Digital Infrastructure
Beyond private cryptocurrencies, Menon also envisions a need to develop more open and interoperable blockchains for digital assets. These infrastructures will serve as the basis for the global financial system. They will also be compliant with necessary regulations.
Accordingly, MAS has partnered with BNY Mellon, JPMorgan, DBS, and MUFG to develop Global Layer One. This open digital infrastructure will help ensure smooth cross-border transactions and the trading of tokenized assets across global liquidity pools.