According to Bloomberg, Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS), stated on Tuesday (28th) that private cryptocurrencies that fail to pass basic financial tests will eventually exit the currency stage. The future monetary system will consist of three key components: Central Bank Digital Currencies (CBDCs), tokenized bank liabilities, and “well-regulated” stablecoins.
As part of the “Hong Kong Monetary Authority – Bank for International Settlements High-Level Meeting” event, Menon said in a thematic discussion on the future monetary system that private digital currencies “completely fail the test of money because they do not hold value,” and “no one will put their life savings into these things, people buy and sell these things to make quick money.”
Menon also stated that regulatory authorities are moving towards a stablecoin system, where stablecoins are fully backed by high-quality government securities or cash, allowing them to be used like narrow money. He said, “The advantage is that they exist in token form and can be used for various innovative applications.”
Deputy Governor M. Rajeshwar Rao of the Reserve Bank of India is optimistic about CBDCs. At the same thematic discussion, he stated that if Central Bank Digital Currencies can meet unmet user needs and be implemented using available technologies and infrastructure, they will achieve greater success.
Rao stated, “Data privacy is a concerning issue. Cybersecurity and resilience are also very critical issues that we must ensure, so that CBDCs can be trusted like physical currency.” Regulatory authorities are also working to promote offline transactions.
The Reserve Bank of India is one of the few central banks that have introduced CBDCs in pilot programs, with approximately 2.75 million participants to date. Rao believes that the scope of CBDCs can be further expanded to include interbank currency market transactions.
Rao also mentioned that so far, CBDCs have been operating on a bilateral basis, and there is a need to consider how to implement them on a multilateral basis in the future.