- November 29, 2023
- Posted by: [email protected]
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According to Ravi Menon, the managing director of Singapore’s central bank, private cryptocurrencies lacking fundamental financial service attributes are destined to fade away from the monetary landscape. Menon emphasized three key components in his vision for the future monetary system: central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins. These insights were shared during a panel discussion on the future of the monetary system, jointly hosted by the Hong Kong Monetary Authority and the Bank for International Settlements.
During the event, Menon pointed out the deficiencies of private digital coins, emphasizing that they have “miserably failed the test of money” as they struggle to maintain value. He highlighted the common perception of individuals not entrusting their life savings to these assets, considering them tools for quick profits rather than reliable stores of value. Menon predicted that private cryptocurrencies, particularly native digital tokens, will eventually exit the scene due to their inability to meet essential monetary criteria.
M. Rajeshwar Rao, deputy governor at the Reserve Bank of India, expressed optimism about the success of central bank digital currencies. Rao stressed the importance of meeting unmet user needs and leveraging accessible existing technology and infrastructure for CBDCs. He also emphasized the critical role of cybersecurity and resilience in gaining trust for CBDCs.
Rao disclosed that the Reserve Bank of India is actively exploring offline transactions to enhance the practicality of CBDC usage. As one of the few central banks conducting CBDC pilots, the RBI 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.
The discussion reflects a broader sentiment among central bankers and financial authorities, signaling a shift toward embracing CBDCs and regulated digital assets while expressing skepticism about the longevity of private cryptocurrencies that fail to meet stringent financial criteria. Menon and Rao’s perspectives contribute to the ongoing dialogue surrounding the evolution of monetary systems in the face of technological advancements and changing consumer expectations.
