Bank of England: Stablecoins Not Stable for Investors

A Bank of England official stated that stablecoins, which are intended to be an alternative currency to traditional currencies, are not stable enough to be widely used by consumers.

Andrew Hauser, the UK’s executive director for markets, stated that the value of digital currencies like TerraUSD and Tether is not known in real-time and does not provide details on how they can be converted.

Hauser stated Wednesday that they were not stable in a statement he made to a panel hosted at the Federal Reserve Bank of New York. “Holders must be prepared to accept that they might find themselves in serious financial trouble.”

These remarks are part the BOE’s efforts to make the case for digital currencies being regulated. They see them as a growing risk to the financial sector. The market for $1.7 trillion is larger than the subprime mortgages were in 2008 when they restructured global markets.

TerraUSD and Tether were once key components of the digital currency system. They offered users a predictable method for trading money. The former’s value dropped to zero in a matter of days while the latter fell below parity. Hauser stated that regulators will be more interested in securities as they become more popular.

Hauser stated that while cautions to buyer beware may suffice for coins in niche uses, they are not sufficient for coins with a systemic scale.

He said that these rules could require issuers of digital currency to back them with central bank deposits. He also addressed a variety of other topics related to digital currency, including:

  • The potential impact of a “central bank digital currency” (or CBDC) for retail investors on bank balance sheets could be significant
  • Because digital currencies are not currently able to fund loans, it would have a negative impact on monetary policy.
  • If CBDCs were used, central bank balance sheets would likely shift
  • If adopted, CBDCs would be the first type of new central bank liability in many centuries. These could have significant implications for the size, composition, and risk profile of our balance sheets, as well as for the monetary policy transmission mechanism and for monetary control. These effects must be understood and incorporated into the design of CBDCs.


Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned
Share Talk
Tweet
WhatsApp
Email
Pocket
Share
Share
Malcare WordPress Security