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FED: Stablecoins have to keep up with the stability of fiat money



Federal Reserve chief Christopher Waller said last month that stablecoins can be valuable if they can match the stability of conventional currencies.

The Fed official gave insights into how global financial authorities want to monitor stablecoins (i.e. private digital money ). Ultimately, you want to make sure that they are a secure payment method.

In a virtual appearance, Waller said that authorities may want to review the economics of stablecoins even though they're new to the market. Because you don't want to endanger the integrity of the financial systems.

The United States has a long history of developing, refining, and integrating new payment technologies. It has traditionally been done in a way that preserves the integrity of financial institutions and payment systems.

Stablecoins ensure healthy competition

Waller added, however, that stablecoins can be healthy competition for “existing payment platforms. They can also help the payment system reach a wider range of consumers ”.

However, he also believes that stablecoins are potentially risky:

“The government and regulators shouldn't rule out the possibility that they can help solve the problems. For example, by providing better insight into the resources and obligations that ultimately support any system of privately spent money. "

The bank chief's remarks come at a time when the Fed and other US agencies are trying to nip the growth of private digital money in the bud. They want to point out the risks that stablecoins pose for the financial stability of the country. And also the impact they have on government-issued fiat currency.

Fed is considering possible introduction of the digital dollar

At the same time, the US Federal Reserve is playing with the idea of ​​introducing a digital dollar. Transactions with it should be faster and cheaper. But some officials strongly warn against taking such a route.

In contrast to Bitcoin - which is very volatile and unpredictable - stablecoins link their value to government money (such as the US dollar). This private digital money can be exchanged for regular money at any time.

However, the question arises as to whether private digital money needs state support. That has generated a lot of interest in stablecoins lately.

When it comes to central bank digital bank money (CBDC), the Fed governor says the mandate for it does not fall within the jurisdiction of the Federal Reserve.

I don't see it as the Fed's job to step in and compete directly with the private banking system to cut payment costs.

He further noted that private money as Stablecoins or other cryptocurrencies must be regulated to ensure the safety of consumers and a solid business. In his opinion, regulations shouldn't prevent private banks from offering stablecoins either.

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