A naukri.com initiative
Coindoo
2w
178
Image Credit: Coindoo
BIS: Stablecoins Fail Core Tests to Be Future Money
- The Bank for International Settlements (BIS) stated in its annual report that stablecoins fall short of essential qualities of robust money: singleness, elasticity, and integrity.
- Stablecoins, like USDT, lack elasticity as they require full backing and cannot dynamically respond to changes in demand compared to central bank money.
- True monetary singleness, where money issued by different institutions is interchangeable, is not met by stablecoins, which are often issuer-specific and trade at varying values based on trust and backing.
- Issues with integrity arise as not all stablecoin issuers enforce consistent anti-money laundering (AML) or know-your-customer (KYC) standards, undermining security and legal uniformity in national monetary systems.
- The BIS acknowledges that stablecoins offer benefits like fast payments, programmability, and accessibility, but these do not make them suitable substitutes for traditional money, given the risks of regulatory fragmentation and financial crime.
- While critical of stablecoins, the BIS maintains a positive outlook on tokenized finance, viewing the tokenization of central bank reserves, commercial bank money, and government bonds as a transformative opportunity to enhance the financial system.
Read Full Article
10 Likes
For uninterrupted reading, download the app