Piyush Gupta, chief executive officer (CEO) of Singapore-based DBS Holdings Group Ltd, believes that private digital coins like Bitcoin Will continue to grow into a meaningful store of value similar to gold. Nonetheless, it is unlikely that cryptocurrencies will play the role of state-backed money, he said in the bank’s annual report released on Wednesday.
“I also expect that regulators (and politicians) will be reluctant to relinquish control of monetary policy and economic management tools, and therefore will be very cautious about allowing private money to flourish. Having said that, I think Private money (crypto) will continue to grow as a worthwhile store of value, just as gold is today.”
The head of a global bank does not think that privately issued digital coins (such as bitcoin) are playing the role of state-backed money. “This is because money must have three qualities: a unit of account, a medium of exchange, and a store of value. It is difficult for privately issued coins to acquire the first two of these.”
According to Gupta, the first two of these are difficult to obtain in privately issued coins, because of reasons include lack of ubiquity, lack of trust in the “issuer” and great volatility in value, among others.
While the technology used to issue these coins (blockchain) is indeed very powerful, and forms a basis for creating immutability and transparency, he said the truth is that it will still be some time before common Man will accept it universally when it comes to regular monetary transactions.
Meanwhile, Gupta said central bank digital currencies will become a more common place and “need to stay close to these developments.” Since 85% of the world’s central banks are either currently studying or operating it, “the direction of travel appears to be clear”, he said. Gupta said that DBS is participating in the sandbox of the industry and experimenting with technology.
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