The Biden administration, the Federal Reserve System and the Financial Stability Board recently raised concerns about “stablecoins”, suggesting that these unique cryptocurrencies could pose a major risk to global financial stability.
After Bitcoin and Libra – Facebook’s dead-on-arrival digital currency – global financial regulation authorities have a new enemy: stablecoins. The Financial Stability Board (FSB) specifically targeted these cryptocurrencies in its report on the dangers of crypto assets, published on February 16.
Growth of stablecoins has continued through 2021 “despite concerns about regulatory compliance, quality and sufficiency of reserve assets, and standards of risk management and governance”, the global organisation, created by the G20 in 2009, wrote. Now, it said, they are poised to endanger global financial stability.
Stability in a volatile world?
Stablecoins’ status as the villain of the finance world could seem surprising for an electronic currency originally created in order to “put the brakes on the volatility of Bitcoin and to rightly bring a bit of stability into this sphere”, Nathalie Janson, economist and specialist in cryptocurrencies at Neoma Business School, told FRANCE 24.
Stablecoins are cryptocurrencies for which the price practically never varies, as they are indexed using a base reference such as the US dollar. For example, a Tether…
