Stable Coins: Currency for a Digitized World
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The IMF has warned that independent cryptocurrencies could destabilize traditional economic systems and has suggested countries digitize their own currencies instead to maintain control over money supply and regulation. Many central banks are now rushing to digitize their currencies after initially studying stablecoins, or digital currencies backed by traditional currencies, to gather more data on digital forms of money.
Stable Coins: Currency for a Digitized World
- 2. The IMF has warned that independent cryptocurrencies may destabilize regular economic systems They have suggested that countries digitize their own currencies in response That way, they will retain control over money supply and be able to regulate their systems A rush to do this has started at central banks across the world; but they are studying stablecoins to begin with and planning to digitize their currencies after they have some more data 01 02 03 04 IMF’s Warning
- 3. A Stablecoin is a form of digital money which is directly backed by a fiat currency. A USD linked stable coin would be: A digital token backed by USD Solution: Currency Backed Stablecoins The USD amount would be held in a public sector bank account Each token of this stablecoin could be redeemed for a single USD at this bank
- 4. A Stablecoin is digital money which is pegged to the value of a fiat currency such as USD. There are currently over 10 US Dollar linked Stablecoins (such as Tether). The Stablecoin provider can hold the fiat currency reserve in a central bank, this way the clients are protected from any Stablecoin issuer related risks. Digital or Software wallets can be used to securely store and move stablecoin around. 01 02 03 04 In Depth
- 5. Instantaneous transactions enabled by the underlying blockchain technology. Distributed across multiple nodes, which means there isn’t a single point of failure and greater reliability in the system. Immutable because once transaction data is entered it cannot be edited or tweaked, it can only be appended to. Secured by complex cryptography, the transactions in this distributed and immutable ledger are tamper resistant and therefore can be trusted. 01 02 03 04 Properties
- 6. Minimizes the transaction fees: digital money transactions are done with negligible fees. Stablecoins make money programmable: the digital money can be programmed to follow specific organizational logic and transactions can therefore be automated. Smart Contracts can be implemented using StableCoins where transactions are triggered only when specific external event occurs. Thanks to the underlying blockchain technology all transactions are instantly auditable. Benefits Stablecoins offer several benefits:
- 7. IMF: The Rise of StableCoins IMF: StableCoins to Central Bank Digital Currencies JP Morgan’s USD Linked StableCoin Resources Tether’s USDT StableCoin The Gemini Dollar StableCoin
- 8. Questions?