The global digit assets industry is dealing with regulatory challenges posed by the biggest of financial watchdogs. The recent setbacks like Binance and its former CEO pleading guilty to violating US federal law or SBF’s FTX crash have spread several doubts among the traders. On the same note, Singapore’s central bank chief reportedly stated that private digital coins have failed the test of being a reliable store of value.
Exit of private cryptos
According to a report by Bloomberg, Ravi Menon, Singapore’s central bank chief was speaking at a panel discussion on the Future of Monetary System in Hong Kong. He projected the eventual exit of private cryptos that have failed to meet the fundamental tests of financial services. He added that private digital coins have failed the test of being a reliable store of value. This led to their anticipated departure from the monetary scene.
Menon suggested that the future monetary system might comprise three main components. These will be Central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins. He highlighted the shortcomings of private digital tokens noting that people do not entrust their life savings to these assets due to their inherent volatility.
However, Singapore’s central bank chief mentioned stablecoins that are fully backed by high-quality government securities or cash. He suggested that they could serve as a form of narrow money and be used for various innovative applications ahead. He emphasized the tokenized nature of stablecoins as a key advantage.
CBDCs are here to stay
M. Rajeshwar Rao, a deputy governor at the Reserve Bank of India (RBI) was also present at the event. He discussed the potential success of central bank digital currencies (CBDCs). He highlighted the importance of addressing user needs, ensuring data privacy, and bolstering cybersecurity. This would build resilience for CBDC’s trust among the public. The RBI has already launched a CBDC pilot with around 2.75 million participants. However, Rao sees the potential expansion of CBDCs to include interbank money market transactions.
While acknowledging the progress made with CBDCs on a bilateral basis, the RBI deputy governor pointed out the need for greater consideration on implementing CBDCs on a multilateral basis in the ahead.
