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Singapore’s central bank’s managing director, Ravi Menon, emphasized that private cryptocurrencies falling short of fundamental financial service tests will eventually fade from the monetary scene.
Menon outlined his vision for the future monetary system, highlighting three key components: central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins.
“Private Cryptocurrencies Fail to Retain Value”
The panel discussion on the Future of the Monetary System was jointly hosted by the Hong Kong Monetary Authority and the Bank for International Settlements.
During the event, Menon pointed out the shortcomings of private digital coins, stating that they “have miserably failed the test of money because they can’t keep value.”
He emphasized that individuals typically do not entrust their life savings to these assets, viewing them as tools for quick profit rather than reliable stores of value.
Menon predicted that private cryptocurrencies, specifically native digital tokens, will eventually exit the scene due to their inability to meet essential monetary criteria.
RBI Deputy Governor Optimistic Over CBDC Success
Meanwhile, M. Rajeshwar Rao, a deputy governor at the Reserve Bank of India, shared insights during the same panel discussion.
Rao expressed optimism about the success of central bank digital currencies, highlighting the importance of meeting unmet user needs and employing accessible existing technology and infrastructure. He also mentioned the critical role of cybersecurity and resilience for CBDCs to gain trust.
Rao noted that the Reserve Bank of India is actively exploring offline transactions to enhance the practicality of CBDC usage. The RBI, among the few central banks conducting CBDC pilots, envisions its digital currency facilitating interbank money market transactions.
While CBDCs currently operate on a bilateral basis, Rao suggested that future considerations should explore implementing them on a multilateral basis.
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