Stablecoins and central bank digital currencies (CBDCs), not cryptocurrencies, will be part of the financial ecosystem in the future, said the chief executive of Singapore’s central bank during his keynote address at the Singapore Fintech Festival.
“There are four candidates for digital money,” said Ravi Menon, calling them privately issued cryptocurrencies, CBDCs, tokenized bank liabilities and well-regulated stablecoins.
But in Menon’s view, cryptocurrencies have failed the test of digital money because “they have performed poorly as a means of exchange or store of value, their prices are subject to wide speculative fluctuations, and many investors in cryptocurrencies have suffered significant losses.”
The Monetary Authority of Singapore (MAS), he said, sees well-regulated stablecoins as a promising digital currency that complements CBDCs and tokenized bank liabilities. During the speech, Menon cited StraitsX stablecoin and Paxos Digital’s new USD-pegged stablecoin as examples.
While Singapore is considered a crypto hub in Asia, regulators would prefer the country to be known as a hub for digital assets. Menon emphasized this in his speech by highlighting ways the technology can be used outside of crypto speculation.
Menon mentioned how Project Guardian, led by MAS and industry partners, is tokenizing foreign exchange, bonds and funds to increase global liquidity, streamline cross-border transactions and improve operational efficiency in financial markets, with major global banks making attempts .
“A larger vision that is emerging is a network of interoperable systems that enables instant and seamless processing of payments, clearing and settlement,” he said. “Digital assets have two critical characteristics that can fundamentally change the nature of financial transactions.”
Menon said existing digital asset networks, including public permissionless blockchains and private permissionless blockchains, face challenges such as lack of accountability, legal uncertainty and interoperability issues, which limit their suitability as a global digital asset infrastructure.
In response, the Monetary Authority of Singapore (MAS) is launching the Global Layer One (GL1) initiative.
“GL1 is designed to be a global public good,” Menon said. “It will facilitate seamless cross-border transactions and enable trading of tokenized assets across global liquidity pools while meeting relevant regulatory requirements.”
GL1 is part of Singapore’s efforts to ensure that FinTech has a “greater purpose”, Menon said, emphasizing that FinTech should focus on solving real-world problems and improving people’s lives.
“Together, digital assets, digital money and essential digital infrastructure can help realize the vision of seamless financial transactions around the world,” he said.
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