At the recent GDEC 2023 conference, Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), critiqued Bitcoin and similar digital currencies, questioning their viability as a form of money.
Menon asserted that private cryptocurrencies, including Bitcoin, have “miserably failed the test of money,” primarily due to their volatility and use as vehicles for speculation rather than stable stores of value. This perspective aligns with a growing skepticism among financial authorities regarding the practicality of cryptocurrencies in everyday financial transactions and savings.
However, Menon’s reference to Bitcoin as a ‘private cryptocurrency’ warrants scrutiny. Unlike truly private digital currencies that operate on permissioned or restricted ledgers, Bitcoin is fundamentally public, operating on a decentralized and transparent blockchain. This misclassification may raise questions about the general understanding of cryptocurrency classifications among financial regulators and the need for a more nuanced conversation about the diverse nature of digital assets.
Further delving into Menon’s vision, he anticipates a future monetary system comprising three main components: Central Bank Digital Currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins. This triad, Menon suggests, could offer the stability and regulation that current cryptocurrencies lack, potentially leading to a more integrated and regulated digital financial environment.
The video clip, which was reported on by Bloomberg, contains the following statement by Menon.
“Private cryptocurrencies, bitcoins, and the like I think have miserably failed the test of money because they can’t keep value. Most of the attraction is as a means for speculation.
Nobody keeps their life savings in these things. People buy and sell these things to make a quick buck. I don’t think it meets the test of money.
So private cryptocurrencies, which are native digital tokens, unfortunately, don’t make that test. So I think that they will eventually leave the scene, leaving these three components, CBDCs, tokenized bank liabilities, and well-regulated stablecoins, as the three prongs of a future monetary system.”
Ravi Menon’s comments offer significant insight into the evolving regulatory perspective on digital assets. While there is merit in his critique regarding the speculative nature of digital currencies like Bitcoin, the mislabeling of Bitcoin as a private entity points to a larger conversation about the diverse ecosystem of digital assets.
Most notably, given MAS’s seemingly progressive stance on digital assets, it is noteworthy to hear the managing director classify Bitcoin as a ‘private’ asset.