Singapore Banking Chief: Private Crypto Has ‘Miserably Failed’

We could be witnessing the twilight of private cryptocurrencies, says one of Singapore’s top central bankers.

Monetary Authority of Singapore (MAS) Managing Director Ravi Menon argued Tuesday (Nov. 28) that private crypto will eventually be replaced by a monetary system ruled by central bank digital currencies (CBDCs), “well-regulated” stablecoins and tokenized bank liabilities.

Private digital coins “have miserably failed the test of money because they can’t keep value,” said Menon, whose comments at a Hong Kong Monetary Authority–Bank for International Settlements (BIS) event were reported by Bloomberg News.

“Nobody keeps their life savings in these things,” he added. “People buy and sell these things to make a quick buck. Private cryptocurrencies, which are native digital tokens, don’t meet that test, so I think that they will eventually leave the scene.” 

By contrast, Menon said, regulators are shifting toward a system of stablecoins backed by cash or government securities. 

“The beauty is it’s in token form, and it can be used for a variety of innovative applications,” he told the audience.

His comments follow the recent MAS debut of a series of initiatives designed to solidify the use of digital money in the country. As reported here, MAS is promoting three forms of digital money, the same three Menon addressed in his speech Tuesday: wholesale CBDCs, tokenized bank liabilities and regulated stablecoins.

Menon’s views on stablecoins differ from that of one of his hosts. The BIS earlier this month published an analysis showing that with a decade of trading history, none of the more than five dozen stablecoins it studied were able to hold on to their pegs. 

“Stablecoins, of course, are constructed to do just that: trade with an asset backing (such as a currency, or a basket of assets) so that valuations, ostensibly, won’t fluctuate as much as has been seen in the cryptocurrency realm,” PYMNTS wrote recently.

However, a closer look at the history of 68 stablecoins, as shown in the BIS paper, reveals that stablecoins don’t live up to their billing as being stable.  

“Issuers claim that stablecoins can be redeemed at par with the value of the relevant peg,” the paper noted. “To date, the majority of stablecoins have been pegged to a single asset, most typically sovereign currencies, such as the U.S. dollar or euro, but also commodities such as gold or another crypto asset.”

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