Central Bank Digital CurrenciesCryptocurrencyCryptocurrency RegulationNewsStablecoin

Stablecoins Make CBDC Development Redundant – Chris Waller

Federal Reserve chief, Chris Waller, has restated his doubts about implementing a national digital currency. Giving his opinion through a speech released Wednesday afternoon, Waller stated that the stablecoin innovation makes it unnecessary to have a CBDC.

Stablecoins’ Risks

Even though Waller revealed the positives about stablecoins, he also revealed that there are still a few risks associated with them. One of such risks is a possible destabilization in which fraudulent issuers offer bad financial instruments. Thus, resulting in a panic in the market that goes far beyond the investors in that instrument.

Another risk might be a failed payment settlement functionality in which the lack of stablecoin centralization creates a diverse payment system. Waller further revealed that there is scalability in adopting these stablecoins might be challenging.

A monopolized large stablecoin provider will eliminate all rivals, and users will lack access to various benefits from other providers. The Fed governor also extolled the decentralization feature of these coins, saying, “there should be excitement that a financial instrument can be developed without the participation of the traditional financial institution and systems. But it is no surprise since it’s coming from Silicon Valley. However, these new financial instruments and the traditional financial institution should be given a level playing field.”

Despite their soft stance on stablecoins, America’s financial watchdogs have recently cast watchful eyes on the stablecoins industry. Even the FDIC is seeking ways there can be interrelationships between banks and virtual assets.

📰 Also read:  Court Hands Florida Man a 20-Year Jail Term Over Crypto Ponzi Scheme

The Stablecoins Regulation Debate Goes On

There has been a heated debate regarding stablecoins and their regulation in the last 12 months, especially as the industry’s market cap has increased by almost 500% this year alone. American stablecoin issuers opine that the best solution is greater transparency. Since the Fed is the country’s apex bank, its position will be crucial to determining the fate of the e-dollar in the future.

Would private stablecoin issuers do a better job in issuing the stablecoins, or would it be best for the banks to do it? The Fed and the banks work together in running the current monetary system. The Fed issues physical cash and gives the digital accounts to banks.

The banks provide each user with their personalized digital account details to make transactions on their bank accounts. Another issue in the debate over the e-dollar is whether there should be regulatory interference regarding issuance.

Financial Experts Can’t Agree On The Future Of The Global Digital Payments System

Reps from various niches in the finance industry met earlier in the week in London to discuss expectations on digital payments for the future. However, they couldn’t agree on a preference for the privately issued stablecoins or the government-issued national digital currencies. Previn Singh from Credit Suisse opined that both should be made available as they have their separate uses.

📰 Also read:  OpenAI Policy Expert Miles Brundage Leaves as New AI Models Roll Out

While Andrew Turner (from the FIS firm) agreed with Singh, Julian Sawyer (a top-level exec with BitStamp) argued otherwise. Sawyer said there needs to be clarification on the value each brings to the market before one can be chosen over the other.


Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.

📰 Also read:  Vitalik Buterin’s Helios Push Targets Faster and Scalable Ethereum Rollup Networks

Shelly Melancon (Switzerland)

Shelly is a cryptocurrency enthusiast from Switzerland, she bought her first crypto in 2015 when it was way less popular then it is today and since 2017 she has been writing about cryptocurrency for online news portals. Shelly is the newest addition to the Tokenhell team, she writes mostly news and reviews related articles , stay tuned to her posts to stay up to date with the crypto world.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Skip to content