The CEO of Singapore’s DBS Bank believes that regulators will limit the growth of cryptocurrencies in an effort to maintain control over monetary policy.
Piyush Gupta said that the global spread of cryptocurrencies is hindered by a lack of faith in issuers and its high volatility. The head of DBS admits that the blockchain is indeed a very powerful technology that can provide permanence and transparency. At the same time, Gupta believes that it will take time before people everywhere accept cryptocurrencies and use them for payments.
“Regulators and politicians will not relinquish control over monetary policy and economic management tools, and therefore will be very cautious about the growth of cryptocurrencies. I really think that cryptocurrencies will continue to grow as a store of value, like gold today,” says the banker.
The head of DBS is confident that the number of countries that have launched a national digital currency will grow as 85% of central banks around the world are currently studying and/or testing CBDCs. At the same time, Gupta believes that the option of using digital currencies of the Central Bank in international transactions is more likely than as a means of settlement within the country.
Central banks are now deciding to what extent they want to get rid of intermediaries in the form of the existing banking system, argues Gupta. The Central Bank is interested in whether they can use it to store CBDC wallets, whether wallets will become better than existing banking solutions.
The head of the Singapore bank believes that central banks are evaluating the potential impact of the state digital currency on the effectiveness of monetary policy, the availability of loans, ensuring the wider availability of financial services, the security and stability of the financial system:
“We try to keep abreast of such developments by participating in joint industry projects and experimenting with technologies.”
Gupta believes that the introduction of DeFi will lead to a rethinking of the nature and construction of existing social and economic mechanisms. The Singaporean banker is confident that the programmability of smart contracts will rethink the processes associated with settlements, anti-money laundering (AML) and knowledge of your customer (KYC). This can dramatically change the structure of back office operations by reducing costs and improving overall efficiency and effectiveness.
Piyush Gupta is confident that the goal of DeFi – to replace centralized institutions and democratize finance – is not achievable. Since this method cannot solve the important question of the role of the nation state and its responsibility for the security and stability of the financial system. The banker believes that the state is still the most important organizing mechanism and in the near future its role will continue.
Recall that last year the brokerage division of DBS Bank received a license from the Singapore regulator to provide cryptocurrency services.
Source: Bits
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