Initial euphoria and boosterism regarding pandemic-era increases in contactless payments amid a broadly permissive policy environments is ending. While markets mostly focused on the monetary policy decision today at the Bank of England, the Financial Policy Committee (the prudential regulator -- FPC) sounded a decidedly cautionary note about the near-term prospects for stablecoins to serve as an alternative to fiat currencies:
Readers attuned to language subtleties will be intrigued by the qualifiers. "Some major stablecoin proposals...."
The qualifier begs the question of WHICH (if any) stablecoin proposals do meet the criteria for serving as alternatives to fiat currencies. The most likely answer is that central bank digital currencies (CBDCs) would meet the criteriae but private issuers would not.
Might private issuers be willing....and able...to serve as a source of strength and stability for their tokens on a par with central banks? The FPC statement implies that a large company ready, willing, and able to serve the same function might be considered on a par with a CBDC.
Stay tuned....this debate is only just getting warmed up.
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