Singapore’s central bank is drawing a sharper boundary around where stablecoins fit in tokenised finance. Monetary Authority of Singapore managing director Chia Der Jiun said stablecoins should not be assumed to maintain par value in the same way as commercial bank deposits, and that they may have limits when used to settle large wholesale transactions.
His remarks, delivered on Oct. 9 as MAS continues work on stablecoin rules, set out a hierarchy for digital settlement in which central bank money and bank-linked instruments sit above privately issued stablecoins. They also point to further policy questions if some issuers become large enough to be considered systemically important.
Deposits and stablecoins treated differently
Chia said commercial bank deposits keep value parity because they can be exchanged at par for central bank reserve money. In his view, that foundation does not automatically apply to stablecoins, whose credibility depends instead on factors such as transparency and the adequacy of reserve assets backing them.
Because of that difference, he said stablecoins may not be suitable for settling large wholesale transactions. The comments suggest MAS does not see stablecoins as interchangeable with deposit-based money in high-value market infrastructure, even if they are regulated and designed to hold a stable value.
A settlement hierarchy for tokenised markets
The speech indicates that MAS places stablecoins below deposit tokens and central bank money in tokenised financial markets. Chia said deposit tokens are likely to gain traction in banking uses including cash management, while stablecoins may be more naturally used on crypto exchanges and in fintech payment applications.
He added that if private digital money continues to scale, central bank digital currencies will ultimately be needed to anchor monetary stability. That framing keeps wholesale settlement tied to bank money and central bank money rather than to private tokens alone.
Systemic issuers could raise new policy questions
Chia also addressed what could happen if the stablecoin sector grows much larger. If some stablecoins become systemically important, he said, the need to anchor their value stability would increase.
He noted there have been discussions and proposals for tougher regulatory requirements and for giving such issuers access to central bank reserves. Chia did not say whether MAS supports providing reserve access, but the reference shows the issue is already part of the policy debate.
MAS is expanding its wholesale CBDC work
At the same time, MAS has been building the central bank layer it sees as important for wholesale settlement. A wholesale Singapore dollar CBDC has been available through the SGD Testnet since 2025, when DBS, OCBC and UOB completed the first live trial using it to settle overnight interbank loans.
Chia said MAS is now moving to settle tokenised MAS Bills with the wholesale CBDC. That trial was first announced last November and forms part of the authority’s broader effort to support tokenised markets with central bank-backed settlement rails.
Stablecoin law consultation remains open
The comments come as MAS continues a consultation on amendments to the Payment Services Act. Published on Sept. 1 and closing on Oct. 16, the proposals would require licensed stablecoin issuers to hold reserves at least equal to the par value of coins in circulation and to redeem those coins at par.
The consultation also proposes allowing MAS to recognise a limited number of foreign stablecoins from equivalent regulatory regimes, while exempting some multi-jurisdictional issuance arrangements from local incorporation and reserve requirements. Chia’s latest remarks do not alter those proposals, but they clarify the role MAS appears to envision: regulated stablecoins for retail and crypto-market activity, with wholesale settlement still anchored in deposit tokens and central bank money.
Source: www.blockhead.co