At the recent GDEC 2023 conference, Ravi Menon, CEO of the Monetary Authority of Singapore (MAS), criticized Bitcoin and similar digital currencies, questioning their viability as a form of money.
Menon stated that private cryptocurrencies, including Bitcoin, have โfailed the money test miserably,โ primarily due to their volatility and their 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 financial transactions and everyday savings.
However, Menon's reference to Bitcoin as a "private cryptocurrency" deserves scrutiny. Unlike truly private digital currencies that operate on sanctioned or restricted ledgers, Bitcoin is fundamentally public and operates 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.
Delving further into Menon's vision, he anticipates a future monetary system that will comprise three main components: central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins. Menon suggests that this triad could offer the stability and regulation that current cryptocurrencies lack, which could lead to a more integrated and regulated digital financial environment.
He video clipwhich was reported by Bloombergcontains the following statement by Menon.
โI think private cryptocurrencies, bitcoins and the like have failed the test of money miserably because they cannot maintain their value. Most of the attraction is a means for speculation.
No one saves their entire life savings on these things. People buy and sell these things to make quick money. I don't think it passes the money test.
So private cryptocurrencies, which are native digital tokens, unfortunately, don't pass that test. So I think 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.โ
Ravi Menon's comments offer significant insights into the evolving regulatory outlook on digital assets. While his criticism of the speculative nature of digital currencies like Bitcoin has merit, his mislabeling of Bitcoin as a private entity points to a broader conversation about the diverse digital asset ecosystem.
In particular, given the MAS apparently progressive stance on digital assets, it is noteworthy to hear the managing director classify Bitcoin as a โprivateโ asset.
