The future of the monetary system, as envisioned by Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS), will consist of three crucial elements: central bank digital currencies (CBDCs), tokenized bank liabilities, and regulated stablecoins.
Menon shared this insight in a panel session on the Future of the Monetary System during an event hosted by the Hong Kong Monetary Authority (HKMA) and the Bank for International Settlements (BIS) on Tuesday, November 28, 2023.
In Menon’s view, private cryptocurrencies failed the fundamental tests of financial services and will eventually fade away from the financial scene. He emphasized that these cryptocurrencies have only functioned as speculative assets for quick profits.
“Nobody keeps their life savings in these things. People buy and sell these things to make a quick buck,”
Menon said, per Bloomberg.
Menon’s stance echoes a prevalent sentiment among global financial regulators. For instance, Russian Lawmaker Anatoly Aksakov, the chair of the Parliament’s financial committee in Russia, previously stated that the introduction of the nation’s CBDC, the Digital Ruble, would lead to a gradual decline in the importance of traditional banks and they would need to redefine their roles to ensure their survival.
This claim of an evolving landscape also finds support in a report from the BIS in July 2023. The report endorsed tokenization as the next phase of evolution for monetary systems and underscored the global shift towards CBDCs. It revealed that 93% of central banks are actively engaged in CBDC research.
Meanwhile, during the same panel discussion, Rajeshwar Rao, a deputy governor at the Reserve Bank of India (RBI), highlighted that the success of CBDCs depends on them meeting unmet user needs and deploying accessible and existing infrastructure.
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