Singapore fintech boss says stablecoins could beat CDBCs • The Register

While central bank digital currencies (CBDCs) are often advanced as a way to improve the world’s creaking cross-border payments infrastructure, some financial experts believe that government-issued tokens could be usurped by stablecoins and other products.

“I have had the feeling that it is well regulated [stablecoin] could become a disruptive process for the transfer of low value across borders, Monetary Authority of Singapore (MAS) Chief Fintech Officer Sopnendu Mohanty told the Singapore FinTech Festival this week.

“It could create a competitive, low-value, efficient transport system,” Mohanty said, adding that a stablecoin would not replace conventional account-based money transfer mechanisms, which would still be used for higher-value transactions.

Mohanty made his comments while speaking on a panel titled “Achieving Universal Financial Inclusion with Interoperable Instant Payment Systems,” but did not predict when stablecoin-based, cross-border instant payments would become mainstream.

Andrew McCormack, head of Singapore’s Bank of International Settlement (BIS) Innovation Hub, predicted that it will take at least three years for stablecoins to be ready for such payments, reasoning:

Steven Haley, director of the Mojaloop Foundation, an open source effort to create payment platforms for inclusive digital financial services, predicted that it will be an even shorter period before private tokens catch up with publicly issued CBDCs.

“I think you’ve got two years for the wallets — whether the telecom-based mobile wallets in Africa or the FinTech wallets in Asia — to basically say, ‘No, we’re going to do it directly,'” Haley said.

“I think we have a very short window where governments can take control and actually create inclusive instant payment systems that reach those wallets and reach those customers and interoperate with each other, and I think the wallets are going to get there faster.” he added.

“I will say this: much faster than that,” Mohanty replied.

Mohanty said it was not the standards or the technology that stood in the way of interoperability, but rather getting the countries to agree.

“We have to negotiate every conceivable legal definition possible,” Mohanty said, calling it a “nightmare.”

“For me, standards are good, we can work on it. But someone has to figure out the legal and operational interoperability issues,” he added.

“International infrastructure moves slowly,” McCormack acknowledged, citing the need to coordinate the change management process across a large number of actors as a pain point.

“It’s something that can be done,” he offered, citing SWIFT as an organization that manages changes annually.

On Thursday, Singapore announced that it had launched the Ubin+ project, which – according to MAS – is “an expanded collaboration with international partners on cross-border foreign exchange (FX) settlement using CBDCs.”

“Interoperable wholesale digital currencies offer efficiencies across a growing range of cross-border use cases. We will evaluate these new use cases simultaneously, to keep pace with technological advances, focusing on use cases that create good value for the widest range of stakeholders,” Mohanty said of the project in a sealed statement.

In short, Singapore has an each-way bet. Which may turn out to be the sensible thing to do. ®