Pablo Hernández de Cos, General Manager of the Bank for International Settlements, said Monday that stablecoins present both “opportunities and challenges,” urging coordinated efforts to move forward.
The Pros And The Cons
Stablecoins are cryptocurrencies designed to maintain a stable value by pegging it to a reserve asset. Most popular stablecoins, such as Tether (CRYPTO: USDT) and USDC (CRYPTO: USDC), are fiat-backed, holding cash or U.S. Treasuries to ensure a 1:1 redemption rate.
In a speech at a Bank of Japan seminar, Hernández de Cos highlighted the potential of stablecoins to improve cross-border payments and provide “convenient access” to the dollar and other foreign currencies. He also praised their instant settlement and simultaneous settlement capabilities.
“On the other hand, stablecoins pose significant macroeconomic and financial challenges, including their potential effects on credit supply, financial stability and monetary and fiscal policy, ” Hernández de Cos emphasized.
He particularly stressed their …
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