Central Bank Digital Currency is the digital currency of the central bank. This is an electronic obligation of the monetary regulator, denominated in the national unit of account and serving as a means of payment, measure and store value.
CBDCs do not necessarily directly threaten decentralized cryptocurrencies; rather, they aim to eliminate the risks associated with stablecoins. This was stated by the CEO of the crypto fund ARK36 Mikkel Morch. He referred to a speech by Fed Chairman Jerome Powell, in which he allowed “the coexistence of well-regulated private stablecoins and the digital dollar.”
Morch is confident that approach like this can be used also in another countries, for example in Singapore. In his opinion, the introduction of CBDC can even “promote the spread of non-sovereign cryptocurrencies and blockchain technologies.”
“CBDC can reduce the role and demand for stablecoins, provided there is a market for the latter. This applies more to the United States than to Singapore,” Morh explained.
Sopnendu Mohanty, chief financial technology officer at the country’s Monetary Authority expressed a lot of skepticism about the value of private cryptocurrencies. He also said that he expected a state-backed alternative to be launched within three years.
The CEO of the ARK36 crypto fund linked the official’s statements about the “relentless cruelty” of the Central Bank to any “bad behavior” of participants in the cryptocurrency industry with the collapse of Terra and Three Arrows Capital’s liquidity problems. The latter is registered in Singapore.