Crypto Magazine Africa
  • Home
  • News
  • Analysis
  • Bitcoin
  • Blockchain
  • Breaking News
  • Exchange
  • Gainers
  • Losers
  • Opinion
No Result
View All Result
Crypto Magazine Africa
  • Home
  • News
  • Analysis
  • Bitcoin
  • Blockchain
  • Breaking News
  • Exchange
  • Gainers
  • Losers
  • Opinion
No Result
View All Result
My CryptoMag
No Result
View All Result
Home Crypto

Digital currencies: is stablecoin heading for the safety of central banks?

Slightly better and easily exchanged due to its minimal price volatility relative to cash, stablecoin is close to be given access to central bank reserves

by Issa Sikiti da Silva
October 9, 2019
in Crypto
Digital currencies: is stablecoin heading for the safety of central banks?

RelatedPosts

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion

SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap

Mark Zuckerberg struggles to defend Libra as US Congress members grill him for hours

JPMorgan CEO says that Libra is an “idea” that will “never happen”

Challenged and put under tremendous pressure by the arrival of digital currencies, the landscape of banking and money will not be the same again. Therefore it needs to innovate to stay relevant in a society it has been serving for centuries, or die fighting with its boots on.

While digital currencies haters would use the volatility issue as a basis to pour dirt on bitcoin, stablecoin seems to have won the hearts and minds of some prominent experts. They say that stablecoin’s minimal price volatility relative to cash makes it slightly better and can help it to be easily exchanged.

Stablecoins’ interesting and unique features have the potential of attracting consumers  gloally to adopt it as a means of payment.

“Low costs, global reach, and speed are all huge potential benefits,” two International Monetary Fund (IMF) agued last month.

“Moreover, stablecoins could allow seamless payments of blockchain-based assets, and can be embedded into digital applications thanks to their open architecture, as opposed to the proprietary legacy systems of banks,” Tobias Adrian and Tommaso Mancini-Griffoli explained.

However, these also come with notable risks that require prompt regulatory action.

Welcome to central banks?

One possible regulatory path forward is to give stablecoin providers access to central bank reserves. This also offers a blueprint for how central banks could partner with the private sector to offer the digital cash of tomorrow—called synthetic central bank digital currency (sCBDC), the IMF said.

Another approach is to require stablecoin providers to fully back coins with central bank reserves – the safest and most liquid assets available, Adrian and Mancini-Griffoli suggested.

“The People’s Bank of China, for instance, requires giant payment providers AliPay and WeChat Pay to do so.

“And central banks around the world are considering giving fintech companies access to their reserves – though only after satisfying a number of requirements related to anti-money laundering, connectivity between different coin platforms, security, and data protection among others.”

Store of value

The two IMF experts strongly believe that doing so will enhance the attractiveness of stablecoins as a store of value.

“It would essentially transform stablecoin providers into narrow banks, institutions that do not lend, but only hold central bank reserves. Competition with commercial banks for customer deposits would grow stronger, raising questions about the social price tag.”

But there are also clearer-cut advantages. Chief among these is stability, as backing is in perfectly safe and liquid assets. Another is regulatory clarity, as narrow banks would fit neatly into existing regulatory frameworks.

Furthermore, different stablecoins could be seamlessly exchanged thanks to the central bank settling all transactions. This would enhance competition among stablecoin providers, according the IMF’s ‘’From Stablecoins to Central Bank Digital Currencies’’ blog report.

Additional benefits include support for domestic payment solutions in the face of foreign-currency stablecoins offered by monopolies that are hard to regulate.

There is also better monetary policy transmission if pressure on currency substitution was alleviated, and interest rates were paid on reserves held by stablecoin providers—however distant the prospect.

Stablecoin projects

Currently, there are over 100 stablecoin projects being at various stages of development, Forklog reported back in April, citing figures from CoinMarketCap.

The US dollar remains the most popular peg currency among traditional and alternative stablecoins, according to CoinMaketCap, and with a share of the market hovering 75%, Tether seems to be dominating the stablecoin market despite competitors’ success.

Tether is a blockchain-based cryptocurrency whose cryptocoins in circulation are backed by an equivalent amount of traditional fiat currencies, like the dollar, the euro or the Japanese yen, which are held in a designated bank account.

Tether tokens, the native tokens of the Tether network, trade under the USDT symbol, according to Investopedia.

Pic credit: Edge App

Tags: Blockchaincentral banksDigital currenciesIMFStablecoinvolatility
Previous Post

Bitcoin cozying up to African Continental Free Trade Agreement

Next Post

European Union, banks dragging feet on cryptocurrencies

Related Posts

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion
Blockchain

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion

Metaverse -  The Zamundan natural resources like gold, land, minerals and animal hides make the kingdom the richest country in...

by Khanyisile Nkosi, opinion contributor
December 28, 2021
SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap
Analysis

SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap

JOHANNESBURG - A new auto liquidity generating protocol SafeBank YES by DefriBank Digital Limited has broken industry's record when it...

by Khanyisile Nkosi, opinion contributor
May 3, 2021
Mark Zuckerberg tries to defend Libra in Congress
Crypto

Mark Zuckerberg struggles to defend Libra as US Congress members grill him for hours

The founder and CEO of Facebook Mark Zuckerberg, appeared before the US House of Representatives Financial Services Committee last Wednesday...

by Suvajit Banerjee
October 25, 2019
JPMorgan CEO Dimon comments on Libra
Crypto

JPMorgan CEO says that Libra is an “idea” that will “never happen”

Amidst the rising scepticism about Facebook’s Libra project JPMorgan Chase Chief Executive Jamie Dimon has commented that it is “a...

by Suvajit Banerjee
October 21, 2019
Facebook unveils Libra Association, moves closer to cryptocurrency
Facebook Libra

Facebook unveils Libra Association, moves closer to cryptocurrency

Facebook, the world’s largest social network, unveiled its Libra Association this week, which will serve as a launchpad for its...

by Issa Sikiti da Silva
October 16, 2019
European Union, banks dragging feet on cryptocurrencies
Crypto

European Union, banks dragging feet on cryptocurrencies

The European Union (EU) must embrace cryptocurrencies as failure to do so now could mean that it epically falls behind...

by Issa Sikiti da Silva
October 8, 2019
Next Post
European Union, banks dragging feet on cryptocurrencies

European Union, banks dragging feet on cryptocurrencies

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Quick News

Top 50 Richest People in Crypto November 2021

Top 50 Richest People in Crypto November 2021

by Khanyisile Nkosi, opinion contributor
December 28, 2021
0

The 50 Richest People in Crypto November, 2021 The founder and the chairman of DafriBank Digital LTD, Xolane Ndhlovu is...

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion

by Khanyisile Nkosi, opinion contributor
December 28, 2021
0

Metaverse -  The Zamundan natural resources like gold, land, minerals and animal hides make the kingdom the richest country in...

SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap

SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap

by Khanyisile Nkosi, opinion contributor
May 3, 2021
1

JOHANNESBURG - A new auto liquidity generating protocol SafeBank YES by DefriBank Digital Limited has broken industry's record when it...

THE DIGITAL BANK OF AFRICA ANNOUNCES A SUCCESSFUL SALE OF  9.9 MILLION DBA IN PHASE 2

THE DIGITAL BANK OF AFRICA ANNOUNCES A SUCCESSFUL SALE OF  9.9 MILLION DBA IN PHASE 2

by Khanyisile Nkosi, opinion contributor
April 19, 2021
1

  JOHANNESBURG  -  Thousands of Africans flock to DafriXchange to participate in what they describe as African own Bitcoin which...

Most Popular

Top 50 Richest People in Crypto November 2021

Top 50 Richest People in Crypto November 2021

by Khanyisile Nkosi, opinion contributor
December 28, 2021
0

The 50 Richest People in Crypto November, 2021 The founder and the chairman of DafriBank Digital LTD, Xolane Ndhlovu is...

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion

The Kingdom of Zamunda GDP Dethrones That of US GDP By $6.7 Trillion

by Khanyisile Nkosi, opinion contributor
December 28, 2021
0

Metaverse -  The Zamundan natural resources like gold, land, minerals and animal hides make the kingdom the richest country in...

SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap

SafeBank Token Broke A Record With A 24H Surge Above $1,6 billion Market Cap

by Khanyisile Nkosi, opinion contributor
May 3, 2021
1

JOHANNESBURG - A new auto liquidity generating protocol SafeBank YES by DefriBank Digital Limited has broken industry's record when it...

THE DIGITAL BANK OF AFRICA ANNOUNCES A SUCCESSFUL SALE OF  9.9 MILLION DBA IN PHASE 2

THE DIGITAL BANK OF AFRICA ANNOUNCES A SUCCESSFUL SALE OF  9.9 MILLION DBA IN PHASE 2

by Khanyisile Nkosi, opinion contributor
April 19, 2021
1

  JOHANNESBURG  -  Thousands of Africans flock to DafriXchange to participate in what they describe as African own Bitcoin which...

Sign upto our newsletter

About

  • Contact Us
  • Privacy Policy
  • About Us

Sister Brands

  • FX Magazine
  • MLM Magazine
  • Daily Afrika
  • PlusSize Africa
  • DJ Mag Africa

Affluent Series

  • Affluent
  • Affluent Africa
  • Affluent TV
  • Affluent Radio
  • Affluent Sport

Published by UMEH Media All right reserved.

mycryptomag-logo

The leader in crypto and blockchain news, lifestyle, and just about anything crypto. Crypto Magazine is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Crypto Mag is an independent operating subsidiary of UMEH Media Group

  • Home
  • News
  • Analysis
  • Bitcoin
  • Blockchain
  • Breaking News
  • Exchange
  • Gainers
  • Losers
  • Opinion