The financial technology chief of Singapore’s central bank does not foresee a scenario where bitcoin would trigger a global financial meltdown akin to the 2008 collapse of investment bank Lehman Brothers.
In an interview with Channel News Asia, Sopnendu Mohanty – chief of financial technology at the Monetary Authority of Singapore, the country’s central bank, opined bitcoin will not cause a global financial crisis in the event of a price collapse. The central bank official insisted global regulators are “getting serious about this whole cryptocurrency market”, suggesting authorities would step in with regulations when bitcoin markets continue to grow globally.
We know exactly when to intervene, based on the market size and the demand and transaction volume, and we will come in at the right time. So, I’m not overly worried about getting to some large financial system crisis.
Specifically, Mohanty pointed to consumer protection regulations to address ‘the hype’ surrounding cryptocurrency markets.
Singapore, long seen as a technology-forward society, has emerged as a global FinTech hub and has - through its central bank - had plenty to say about cryptocurrencies, blockchain technology and ICOs (initial coin offerings) recently.
After taking a largely hands-off stance on decentralized cryptocurrencies like bitcoin over the years, Singapore’s central bank cautioned the general public against cryptocurrency investments in December, at a time when bitcoin price was trading at all-time high near $20,000.
In October, the head of Singapore’s central bank insisted that bitcoin itself didn’t need any oversight as a cryptocurrency. Instead, MAS chief Ravi Menon insisted a regulator’s focus ought to be on the abuse of cryptocurrencies for illicit financing and other illegal activities. “So, those [regulatory] requirements apply to the activity around cryptocurrency, rather than the cryptocurrency itself,” Menon said at the time.
Further, the central banker insisted that cryptocurrencies had wider applications in addition to their use as a store of value.
The MAS chief said:
If it [cross-border remittance] was going through a blockchain using cryptocurrencies, it could yield benefits. That ought to be the question, rather than whether bitcoins or ether are going up in value or not.
After issuing a public advisory urging the public to be diligent in investments into initial coin offerings (ICOs) in August, the central bank released official guidelines for ICO operators in November.
Featured image from Flickr/sachab.