11-11-2021, 08:20 PM
Bloomberg November 11 | Updated on November 11, 2021
Andy Mukherjee
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The central bank has decided against offering a paperless version of the city-State’s legal tender — at least for now. Not because an electronic version of cash may flop, but because it’ll most likely be a hit. That could have consequences for the island’s financial stability and conduct of monetary policy.
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the monetary authority concludes that “there is no pressing need for a retail CBDC in Singapore at this point in time.” However, it will keep adding to its capability to issue one, just in case the private sector in the future hooks consumers to a particular payment mode only to shortchange them by abusing its monopoly power.
This is a pragmatic approach. Start-ups might welcome an online medium of exchange that’s widely available to the public, and not tied to a large competitor. Then they won’t need to invest in proprietary e-money systems to compete. The problem is that Singapore’s triple-A-rated sovereign has historically accumulated fiscal surpluses and is not known to cheapen its exchange rate to gain an export advantage. That makes its currency an attractive store of wealth. In fact, a digital version may be perceived as superior since paper cash is costly to store.
In a low-interest-rate environment, a Singapore digital dollar could thus walk away with all-important bank deposits, which account for 92 per cent of money supply and all of the online payments by households and firms. It would be a direct liability of the monetary authority and hence devoid of credit risk.
Much better to read full article here: https://www.thehindubusinessline.com/mon...epage=true
Andy Mukherjee
......
The central bank has decided against offering a paperless version of the city-State’s legal tender — at least for now. Not because an electronic version of cash may flop, but because it’ll most likely be a hit. That could have consequences for the island’s financial stability and conduct of monetary policy.
......
the monetary authority concludes that “there is no pressing need for a retail CBDC in Singapore at this point in time.” However, it will keep adding to its capability to issue one, just in case the private sector in the future hooks consumers to a particular payment mode only to shortchange them by abusing its monopoly power.
This is a pragmatic approach. Start-ups might welcome an online medium of exchange that’s widely available to the public, and not tied to a large competitor. Then they won’t need to invest in proprietary e-money systems to compete. The problem is that Singapore’s triple-A-rated sovereign has historically accumulated fiscal surpluses and is not known to cheapen its exchange rate to gain an export advantage. That makes its currency an attractive store of wealth. In fact, a digital version may be perceived as superior since paper cash is costly to store.
In a low-interest-rate environment, a Singapore digital dollar could thus walk away with all-important bank deposits, which account for 92 per cent of money supply and all of the online payments by households and firms. It would be a direct liability of the monetary authority and hence devoid of credit risk.
Much better to read full article here: https://www.thehindubusinessline.com/mon...epage=true
