CNBC: Singapore to Finish Cryptocurrency Trial in 2018

Earlier this year we mentioned that we might see the first central bank digital currency arrive by next year. We also speculated it might come from Singapore. CNBC confirms in this article that Singapore intends to finish up its testing for such a currency in 2018. Below are a few excerpts from the article.

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"Singapore will conclude its experiment with blockchain technology and its own digital currency next year before deciding whether to commercialize the trial, the country's regulator has told CNBC.

In 2016, the Monetary Authority of Singapore (MAS) announced "Project Ubin," an exploration of blockchain or distributed ledger technology.

The project is split into five phases. The first, which looked at establishing a proof-of-concept design to conduct inter-bank payments using blockchain technology, was completed earlier this year. The second phase, which finished earlier this month, saw the development of three different models for inter-bank payments using blockchain.

Now, the MAS trial is looking at    . . . . . . "      click here to read the full CNBC article

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My added comments: Here we have confirmation of something we have been reporting here for some time. At this point, it is too early to tell if Singapore will issue the first central bank digital currency since other countries (like China) are also looking at the idea. However, it is clear that Singapore has established itself as a leader in exploring innovative Fintech solutions and is moving towards some kind of decision in 2018.

One thing to note here is how slowly these things move. This is why when I see articles proclaiming that some kind of new central bank digital currency is "imminent", I take it with a grain of salt. There is no doubt that many central banks around the world are thinking about the idea. However, when you look at what they have said publicly, they tend to hedge on whether or not they will really move forward with it. I suspect that many central banks want to wait and see how the first early adopter central bank digital currencies work in the real world before moving ahead. This is why what happens in Singapore may be a good indicator for how the idea is accepted more globally.
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Added note: Singapore also continues to struggle with how to deal with private digital currencies like Bitcoin. This article talks about that.

David Lipton (IMF) - The Challenges to Sustaining the Global Recovery

In this recent speech, IMF Deputy Managing Director David Lipton talks about a variety of issues that will impact the financial landscape in the future. Below is an excerpt from this speech in regards to how Fintech may impact things.

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. . . . 

Digital Finance

"All of which leads us directly to the third area of change: the broader universe of digital finance, which you will be discussing this afternoon. This is playing out right now before our eyes in the online payments platforms like PayPal and China’s Ali-Pay. In only a few years, many people in China’s cities have stopped using cash altogether. In East Africa, the online banking pioneered by M-Pesa has benefited millions of people who previously lived outside the financial system.

These success stories show how Fintech can be a force for inclusion and development.

But Fintech also presents a serious challenge to traditional banking models. And as online platforms develop lending and investment products, effectively acting like banks, every regulator and supervisor must be concerned with whether the current regulatory framework is adequately encompassing these businesses. Here, too, work is underway, with Fintech firms interacting with regulatory authorities on a range of possible solutions.

But we are still talking about a business that fits broadly within our frame of reference for financial services. A case can be made that next level of this digital transformation—the emergence of crypto-currencies, and new transaction and settlement technologies—is moving well beyond familiar boundaries.

The so-called distributed ledger technology is dispensing with the backroom and moving to instantaneous transactions outside the reach of governments—and that includes the scope of monetary policy. We now see central bankers starting to talk about issuing their own virtual currencies and considering ways of regulating the bitcoins and others.

Here, too, the implications are enormous. National regulators and international standard-setters need to move quickly to define a regulatory setting that can address the issues that will emerge almost before we know it. At the same time, we cannot “throw out the baby with the bathwater” by imposing a regime that stifles innovation.

The Fund has just begun to address these issues within its mandate. Like cyber-threats, there is a great deal of work to do to understand the potential macroeconomic impact."

Please click here to read the full text of the speech by David Lipton

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Added note: The speech also mentions how debt continues to grow globally. This article in Reuters points out the problem with some big numbers.