Following a meeting in Basel between representatives of Libra and 26 central banks, Monetary Authority of Singapore managing director Ravi Menon spoke out about the global risks involved from launching the digital currency, adding that it raises «existential questions» for the status quo.

According to Menon, there were inherent obstacles for the sustainability of private money and the introduction of Libra would only add further challenges.

«The history of private money over the last 3,000 years has not been a good one,» Menon said, according to a «Financial Times» report, though he stressed that its doom nor a Libra boom would be imminent.

«The great promise they put out is cross-border payments. But can we do that without excessively building up other kinds of risks?»

Global Regulatory Approach Required

Whilst regulators are still separately assessing the matter, Menon notes that a «broadly consistent approach» is required for considerations about the roll-out of Libra.

Interestingly, the timing for more coordination is ripe as Menon had just been appointed as the chair of the Bank of International Settlement’s Asian Consultative Council which includes central banks from Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore and Thailand. 

«Some of the macro financial risks [it poses] are actually global in nature,» he said. «It's not as if one regulator can act on its own.»

Public Accountability

One particular concern Menon expressed was with regards to the nature of the entity that would act as the issuer of digital currency. He specifically noted that whilst central banks were not perfect, their aspiration to become independent and publicly accountable entities was sound.

«That's why central banking was born,» he added. «[T]o safeguard the value of the currency.»

Another concern raised was about how Libra could affect global currency markets and capital flow as it would need to maintain a reserve to preserve its peg if volumes expand significantly. 

Menon, who was part of the talks in Basel as the Singapore representative, said that there was still not enough information to determine whether it would ban Libra.