Sopnendu Mohanty, the Chief Fintech Officer at the Monetary Authority of Singapore (MAS), the country’s financial regulator, has stated that blockchain technology could potentially expedite cross-border transfers. Mohanty, a former senior executive at Citigroup, also noted that “he does not see much” potential in central bank digital currencies (CBDCs).
Regulators Began Exploring Blockchain Use Cases In 2016
Mohanty, whose comments came during the Blockchain in Business event held on May 2 at the Massachusetts Institute of Technology (MIT), pointed out that in 2016, lawmakers were not familiar with the various benefits or use cases for distributed ledger technology (DLT).
A couple of years ago, the MSA began experimenting with several blockchain-based solutions, Mohanty revealed. At the time, officials at the MSA had been conducting various tests in order to better understand how DLT-enabled platforms can be used to settle transactions.
Central Bank Digital Currencies May Not Be Useful
According to Mohanty, the staff members at the MSA have now learned how to use blockchain tech to potentially improve several routine business processes. For instance, MSA’s staff has worked on projects which involve using DLT to manage payments in the banking sector. They’ve also explored how blockchain-based payments can be settled against securities and how the distributed ledger can be used to perform cross-border transfers.
As mentioned, Mohanty and his colleagues were not able to find a legitimate use case for central bank digital currencies (CBDCs) in a typical retail economy.
While speaking at the Blockchain for Business event, Mohanty noted that Canada and Singapore’s central banks had already used blockchain-powered solutions to transact in digital currencies. Commenting on the initiative, Mohanty remarked:
The next wave of central bank blockchain projects can make further progress by bringing technology exploration together with policy questions about the future of cross-border payments.
Cryptocurrencies Aren't Considered Legal Tender
In January 2019, the MAS issued a warning regarding false statements, which had allegedly claimed that Singapore’s central financial institution was planning to launch its own cryptocurrency. In its warning letter, Singapore’s law ministry had also outlined the major risks associated with dealing cryptocurrencies - including their relatively high volatility and their potential to be used to financial illicit activities.
As noted by the nation’s law ministry, cryptocurrencies are not considered legal tender in Singapore. The Asian country’s residents were also advised to exercise caution when engaging in cryptocurrency-related transactions - presumably due to the large number of scams associated with them.