BIS Dismisses Stablecoins as Future Money
The Bank for International Settlements (BIS) has declared that stablecoins, digital currencies tied to fiat money, fall short as viable forms of currency. In a recent report, BIS emphasized that stablecoins fail crucial tests in singleness, elasticity, and integrity, preventing them from supporting the monetary system effectively. While stablecoins offer benefits like lower transaction costs and faster speeds, they could pose threats to global financial stability, notably undermining governmental monetary control. They also face challenges with liquidity and universal acceptance, much like old private banknotes, due to varying issuer standards. However, BIS supports tokenization's potential to revolutionize finance by leveraging central bank reserves and commercial money. Despite the concerns, tokenized platforms could iron the path for upcoming financial systems.
FAQ
❓ What are the key flaws of stablecoins according to BIS?
Stablecoins fail in areas of elasticity, singleness, and integrity, crucial for robust monetary systems.
❓ How might stablecoins impact financial stability?
Stablecoins could undermine national monetary control and facilitate financial crimes, posing risks to stability.
❓ What does BIS think about tokenization?
BIS sees tokenization as a transformative innovation that could enhance financial systems if composed around central bank reserves and commercial money.