People should approach high-risk cryptocurrency investments with great trepidation, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) said in a speech at the Singapore Fintech Festival on Tuesday (Nov. 9). The annual conference runs through Friday (Nov. 12).
“The prices of crypto tokens are not anchored on any economic fundamentals, and are subject to sharp speculative swings,” Menon said. “Investors in these tokens are at risk of suffering significant losses.”
He added that MAS “frowns on cryptocurrencies or tokens as an investment asset for retail investors.”
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Overall, Singapore has taken a pro-active and largely positive stance toward crypto, and Menon pointed to the blockchain and the speed and low cost of cross-border money transfers using crypto as bringing about “many potential benefits.”
But unlike other countries, Singapore is not close to working on its own central bank digital currency for retail use, Menon said.
“The case for a retail CBDC in Singapore is not urgent,” he said, adding that physical money is still very much in use, digital payments are competitive, and a high percentage of residents have bank accounts.
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While there are some potential benefits, “issuing a retail CBDC is not a straightforward decision,” he said.
“Retail CBDCs can potentially pose significant risks to monetary and financial stability … if people held a significant portion of their deposits in the form of digital Singapore dollars with MAS, it would considerably reduce our banks’ capacity to make loans,” he said in the speech.
He also pointed out that “Not all cross-border payment improvements need CBDCs or the blockchain” and PayNow, Singapore’s real-time retail payment system, is developing direct links with the payment rails in other countries.
PayNow is linked with Thailand’s PromptPay and has plans to connect with Malaysia’s DuitNow and India’s Unified Payment Interface next year.
“But establishing bilateral payment linkages one jurisdiction at a time is hard work. We need a multilateral solution,” he said.
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