Private Stablecoins Lack Key Stabilizing Mechanisms of Central Bank Currencies, Raising Concerns Over Long-Term Viability
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Private stablecoins lack mechanisms that maintain fiat stability like central bank reserves.
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Stablecoins mistakenly assume solvency from liquidity and lack support during economic stress.
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Stablecoin stability depends on fiat money markets without the mechanisms central banks use.
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Stablecoins struggle to maintain parity between themselves without credit to absorb order imbalances.
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A regulated central bank model could provide stability and credibility lacking in private stablecoins.