By Shelly Melancon (Switzerland)
The World Economic Forum (WEF) has issued a whitepaper detailing the roles and risks of implementing national digital currencies and stablecoins. The important takeaway from the report is the effect of foreign access on a country’s national digital currency. This report is part of the WEF’s DCGC white paper releases.
This new release agrees with previous WEF reports that state that there are risks inherent in international CBDCs. “Extensive international access to a nation’s digital currency can have damning risks to such nations and their foreign counterparts.”
Highlights Of Some Of The Risks
The risks linked with CBDCs, as contained in the paper, include cybersecurity, currency rise/dip, cybersecurity, and tax avoidance. Even though the main theme of this issue was on national digital currencies and not stablecoins, the paper highlighted that these dollar-pegged assets are also risky for new economies.
It must be noted that the paper doesn’t recommend the instant dismissal of CBDCs. Instead, it recommends that authorities and watchdogs promulgate an action plan to cater to any risks caused by these assets. This suggestion becomes more pertinent as more nations launch their national digital currencies.
WEF’s DCGC consists of over 80 top firms collaborating to explore and create structural policies for this industry and their decision-makers. Right now, they focus on CBDCs and stablecoins attempting to establish their risks and opportunities.
Also read:The Main Focus From WEF Whitepaper
The main theme of this WEF paper is on proper coordination and oversight functions over these emerging sectors of the crypto industry. Even though the WEF now admits that crypto would remain a part of our economy, it hasn’t been friendly towards digital currencies in the past. This WEF paper emphasizes the need for regulators to quickly create oversight policies over stablecoins because they pose more immediate risks than the CBDCs right now.
The concluding part of the report states that national digital currencies could be economies’ opportunities for improvement, especially inter-nation relationships. Nevertheless, the authorities seem to be heeding WEF’s suggestion. US financial watchdogs have beamed their searchlight on the dollar-pegged assets recently to regulate the industry. As the crypto market becomes more widely adopted, the top economies are also researching and developing their national digital currencies.
Stablecoin Players Hold Crunch Talks With US Regulators
A Bloomberg report has revealed that stablecoin-related firms (such as blockchain startup figure tech) met with US financial watchdogs this past week, focusing on the best way to launch a stablecoin that won’t contravene regulatory guidelines.
Heads of all the financial watchdogs were reportedly present at the meeting. Sources privy to the meeting (but who would want to remain anonymous) disclosed that the stablecoin-related firms have formed a coalition known as the USDF consortium.
The meeting follows a recently issued policy that states that stablecoin issuers and banks must be subjected to similar supervision and regulation. While the leading financial watchdogs are still formulating crypto policies, they have yet to conclude whether to include stablecoins in this crypto regulation because they are not yet considered enough threat to the traditional finance system.
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