Will stablecoins turn into CBDCs? The FED advisor explained! Recently, there has been discussion about the preference of using stablecoins over other types of digital assets, including central bank digital currencies (CBDCs).
At an event held in London, Antoine Martin, who advises financial stability at the Federal Reserve Bank of New York, said that stablecoins can be a shortcut for central banks of countries that plan to deploy their CBDCs. “Instead of issuing a [central bank digital currency] store, a central bank can support stablecoins by allowing them to be supported individually and deposited into a central bank account,” Martin said while said that there is no need for a central bank. to continue to invest money and other resources in the development of their digital currency.
Speaking about the management of stablecoins against CBDC to a group of policymakers at the Gillmore Center Policy Forum at Warwick Business School in London, he added,
“Adapting our legal framework and legislative environment to support stablecoins is already a daunting task, but it may be easier than running a CBDCs for business use, especially since private companies are now providing all digital business payment methods with legacy technologies. .
Stablecoin and CBDC are like good cousins
Martins compared stablecoins to Chinese mobile payment systems Alipay and Tencent Pay, which are considered to be good cousins many times. Once a customer transfers money using one of these payment platforms, a piece of fiat is held at the central bank of China by the service provider. Therefore, the New York Federal Reserve Advisor advises that this process be replicated in stablecoins. “In fact, for every yuan that customers save, Alipay and Tenpay will hold one yuan in an account with the Bank of China, making them work in stablecoins.”
Before this, Martins had a different opinion about stablecoins, he said that they are more risky than CBDCs. A few days ago, the Hong Kong Monetary Authority (HKMA) published a document suggesting that the exchange of stablecoins may have an impact on their traditional currency. Unlike Hong Kong, the Central Bank of the Philippines strongly supports stablecoins.