A private banking subsidiary of OCBC Bank, Bank of Singapore has mentioned that virtual currencies have the potential to moderately substitute gold as a store of value.
Nevertheless, before that can materialize, crypto assets need to overcome several obstacles including high volatility, regulatory espousal and reputational perils, as per a research note from the bank reported by The National News.
Mansoor Mohi-uddin, the chief economist at Bank of Singapore mentioned,
“First, investors need trustworthy institutions to be able to hold digital currencies securely. Second, liquidity needs to improve significantly to reduce volatility to manageable levels.”
He added that if the problems can be taken care of, BTC possibly will have a place in investors’ portfolios as a possible safe-haven asset and means to spread assets.
Digital assets offer the advantage that they are easy to transfer and accumulate when compared with valuable metals. However, they are also susceptible to robbery by means of hacking, according to the note.
Nevertheless, Mohi-uddin doesn’t perceive digital assets replacing fiat currencies as he finds them an incompetent unit of exchange.
He said that governments are very suspicious of any technology that could possibly substitute national currencies. This would decrease the capability of officials to print money during economic catastrophes, he concludes.
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