[HN Gopher] Stablecoins: Growth potential and impact on banking
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Stablecoins: Growth potential and impact on banking
Author : tobltobs
Score : 51 points
Date : 2022-02-01 19:24 UTC (3 hours ago)
(HTM) web link (www.federalreserve.gov)
(TXT) w3m dump (www.federalreserve.gov)
| joelbondurant1 wrote:
| Hokusai wrote:
| > Additionally, dollar-pegged stablecoins backed by adequately
| safe and liquid collateral can potentially serve as a digital
| safe haven currency during periods of crypto market distress.
|
| That's the Federal Reserve being themselves. Buy US dollars, use
| US dollars as the global currency. It makes a lot of sense for
| the USA, not necessarily for the rest of the world. But the
| Federal Reserve represents it's country interest, so it makes
| sense.
| sremani wrote:
| A quick search revealed that in 2019 88% of international
| transactions were made in USD. So even if Reserve Bank of India
| was doing this analysis -- they might likely take USD as a
| global reference instead of Indian Rupees.
| Terry_Roll wrote:
| The Chinese currency used to be and might still be pegged to
| the US dollar so why shouldnt I invest in the Chinese govt debt
| instead?
|
| I do know some parts of the US govt has complained about the
| pegging because it made US workers more expensive than Chinese
| workers.
|
| And the I remember the PS in the 90's crashing out of the
| Exchange Rate Mechanism when it was pegged to the German DM as
| Germany had(still has) a strong economy which sent interest
| rates soaring to something like 12 or 15%!!!
|
| So pegging currency to others must be more nuanced than that it
| seems.
| vkou wrote:
| > The Chinese currency used to be and might still be pegged
| to the US dollar so why shouldnt I invest in the Chinese govt
| debt instead?
|
| Because the US makes it easy for you to trade dollars around.
| The dollar's dominance will collapse the moment that
| significant restrictions are introduced around who can hold
| it, how they can hold it, and what they can trade it for.
|
| China doesn't care one whit about making it easy for a
| foreigner (or a local) to trade its money (or derivatives)
| around. China cares about stabilizing its economy. If the CPC
| decides tomorrow that currency controls are necessary to
| stabilize their economy, you're going to be SOL. If the CPC
| decides tomorrow that USD, or BTC, or RMB can't flow out of
| China, you're SOL. And so on, and so on.
|
| I wouldn't recommend making investments when you don't
| understand the risks.
| seanmcdirmid wrote:
| I don't think you can invest in Chinese government debt as a
| foreigner, but there are some real estate bonds you can
| buy...just not very safe.
| steelstraw wrote:
| True, but what's the alternative? What would work better?
| vmception wrote:
| Stablecoins already do this. Traders aren't exiting the crypto
| ecosystem during selloffs, they just go to stablecoins and move
| unlimited sums back into risk assets at a moment's notice.
|
| This is the FederalReserve taking a measured analysis, saying
| "wow all those luddites were hilariously wrong and have no idea
| what they're talking about, but we're going to stop just short
| of saying this is already pretty amazing".
| TameAntelope wrote:
| I'm not really an expert on anything crypto, but I very much like
| the idea of stablecoins as a realistic bridge between the
| traditional financial system and cryptocurrency technologies.
| Honestly I think it's both understandable and sad how aggressive
| people have gotten about trying to get organizations to "prove"
| they're adequately backing their stablecoins with cash reserves.
| It feels like a fundamental misunderstanding that arises from
| layperson terms vs. legal/accounting terms.
|
| Attestations vs. audits, what purpose each one serves in an
| accounting sense, and why an organization would opt for one over
| another; these are conversations I don't see being had, but
| conversations that, I think, would clear a lot of the frustration
| and confusion up, on the part of the skeptics.
| nathias wrote:
| The grail of crypto is syntetic anonymous stablecoins which will
| free everyone from the games of the people in power, but the
| backed by fiat centralized stablecoins will be used by
| governments and banks to further their control over people.
| vmception wrote:
| read the paper, the Federal Reserve knows this too and isn't
| advocating for FEDcoin in this paper.
|
| They even know the word "composability" and have lended
| credibility to the term and context as morphed by the smart
| contract space.
|
| > . On public blockchains, this also allows for 24-hours-a-
| day/7- days-a-week/365-days-a-year transactions.5 Second,
| stablecoins are typically built on DLT standards that are
| programmable and allow for the composability of services.6 In
| this context, "composability" means stablecoins can function as
| self-contained building blocks that interoperate with smart
| contracts (self-executing programmable contracts) to create
| payment and other financial services.7 These two key features
| underpin the current use cases of stablecoins and support
| innovation in both the financial and non-financial sectors.
|
| > The public algorithmic stablecoin sector is highly innovative
| and difficult to categorize. However, one can generally think
| of the design of these stablecoins as based on two mechanisms:
| (1) the collateralized mechanism and (2) the algorithmic peg
| mechanism
| jimbob45 wrote:
| It seems disingenuous to host papers on FederalReserve.gov on a
| topic that already undergoes a great deal of inauthentic
| marketing. It _seems_ like the Fed lending credibility to private
| enterprises that may not have as altruistic of intentions as the
| Fed.
| WJW wrote:
| It's a paper analyzing the (potential) impact of stablecoins on
| the currency and institutions governed by the federal reserve,
| written by people working for the federal reserve, with the
| intention of providing facts as a basis for potential
| regulations to be written by the federal reserve. Where else
| would it be hosted?
| [deleted]
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