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In a significant revelation, Singapore’s central bank chief, Ravi Menon, asserted that private cryptocurrencies failing the fundamental tests of financial services are destined to exit the monetary stage. According to a recent Bloomberg report, Menon predicts a future financial landscape dominated by three key elements: central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins.
Notably, as he pointed out during a Hong Kong Monetary Authority event, private digital coins have “miserably failed the test of money” due to their inability to retain value.
CBDCs & Stablecoins: The Future Of Digital Currencies
Cryptocurrency enthusiasts are witnessing a paradigm shift as central banks globally actively explore and embrace digital currencies. Meanwhile, a recent report showed that the Monetary Authority of Singapore’s Managing Director, Ravi Menon, recently outlined a transformative vision for the future monetary system.
According to Menon, private cryptocurrencies that fall short of meeting the fundamental criteria for financial services are destined for obscurity. He suggests that private cryptocurrencies, being native digital tokens, do not meet certain criteria and, as a result, anticipate their eventual decline.
Meanwhile, Menon envisions a future monetary landscape shaped by three pivotal components: central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins. In addition, he emphasized that the shortcomings of private digital coins lie in their failure to preserve value, making them an unreliable store of wealth.
Notably, the shift towards CBDCs and regulated stablecoins reflects a growing acknowledgment of the need for stability and security in the evolving financial ecosystem.
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What It Means For BTC, ETH, and Others?
Private cryptocurrencies, such as Bitcoin and Ethereum, have garnered significant attention in recent years. However, their volatility and lack of intrinsic value have raised concerns about their long-term viability as a form of money.
In addition, Ravi Menon stated that “nobody keeps their life savings in these things” and that they are primarily used for speculative trading rather than as a reliable medium of exchange.
Simultaneously, the Reserve Bank of India’s Deputy Governor, M. Rajeshwar Rao, echoed Menon’s sentiments during the panel discussion. He emphasized that the success of CBDCs hinges on meeting unmet user needs while leveraging accessible existing technology and infrastructure.
In addition, he stressed the critical importance of cybersecurity and resilience for CBDCs to gain trust among users. Notably, the Reserve Bank of India, among the few central banks piloting CBDCs, envisions broader applications, including interbank money market transactions.
Meanwhile, Rao acknowledged that offline transactions present a challenge but assured that efforts are underway to facilitate seamless offline usage. As central banks worldwide embark on CBDC pilot projects, the need for a multilateral approach becomes increasingly apparent.
In addition, he highlighted the necessity for thoughtful considerations on implementing CBDCs on a broader, multilateral basis, signaling a transformative era in the global monetary landscape.
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