Will CBDCs Kill Crypto? This Central Banker Thinks So

CBDC Over Retail Crypto?

At a panel discussion hosted by the Hong Kong Monetary Authority and Bank for International Settlements, Ravi Menon, Singapore’s central bank chief, said cryptos like Bitcoin (BTC) and Ethereum (ETH) have no place in the monetary system. He predicted that such private cryptos without inherent value will likely disappear over time.

Private digital coins have miserably failed the test of money because they can’t keep value. Nobody keeps their life savings in these things. People buy and sell these things to make a quick buck.

Ravi Menon

Additionally, M. Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, expressed optimism about CBDCs fulfilling unmet user needs using existing technology while ensuring privacy and security. The RBI is working on enhancing its CBDC pilot to include offline payments and considering a shift from bilateral to multilateral CBDC mechanisms between central banks in the long term.

Future Monetary System to Have Three Components

Menon envisions future monetary systems comprising central bank digital currencies (CBDCs), tokenised commercial bank liabilities, and tightly regulated stablecoins. Menon suggests that stablecoins, fully backed by quality government bonds or cash, could offer innovative applications with stability, contrasting with the volatility of private cryptocurrencies.

The central bank chief is set to retire by the end of this year and likely voiced his own, private views rather than pointing to an official policy shift for Singapore. Menon’s successor is said to be Chia Der Jiun, a veteran in the regulatory field.

While it is unclear what Chia’s stance on the crypto sector is, his expertise, developed over 18 years at the Monetary Authority of Singapore (MAS), is broad and significant. In his final role as Deputy Managing Director (Corporate Development), he led important areas such as reserve management, where he was responsible for handling foreign exchange and other reserves. His expertise also extends to monetary policy implementation, focusing on executing strategies to maintain economic stability and growth. Additionally, Chia played a crucial role in prudential policy, banking supervision, and macroeconomic surveillance, overseeing the health and regulation of the financial sector.