CBDC Could Become A ‘Permanent Feature,’ According To MAS Director

Although decentralized crypto assets like Bitcoin (BTC) “fail as money,” Singapore’s central bank head has claimed that digital assets or CBDC might become a “permanent feature of the financial landscape.”

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), admitted in a new opinion piece published by the International Monetary Fund (IMF) that he can see a future in which digital assets – primarily stablecoins and central bank digital currencies (CBDCs) – coexist with the current system, and even become a “permanent feature” of it.

“Traditional fiat currencies will continue to dominate, but securely backed private stablecoins and wholesale CBDCs could be expected to play an important role in cross-border payment and settlement,” Menon wrote.

He noted that even though the rationale for retail CBDCs, which are supposed to be used by individuals, might conceivably develop as a modest component of the monetary base—similar to the role performed by cash today—although the case for them is “less strong.”

The difference between central bank money, now recognized as a real currency, and commercial bank money retained as bank deposits, according to the Singaporean central banker, is of little importance to most people.

Meanwhile, Menon stated that so-called private and unbacked cryptocurrencies like Bitcoin “fail as money.” Menon expressed his organization’s skepticism about the possibility of a retail CBDC being launched in his native country of Singapore.

“MAS believes that the case for a retail CBDC in Singapore is not compelling for now, given well-functioning payment systems and broad financial inclusion,” he wrote. 

He said that the current payment system is already fast, efficient, and free and that a residual quantity of currency is still in circulation and unlikely to disappear.

Despite this unfavorable posture, Singapore is constructing the required infrastructure for a retail CBDC if conditions alter, according to the MAS director.

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