IMF and FSB Paper Warns Against Ineffective Crypto Bans

IMF and FSB Paper Warns Against Ineffective Crypto Bans


Stablecoins and Volatility: A Warning from Worldwide Standard-Setters

Stablecoins adopted by multiple jurisdictions have caught the attention of worldwide standard-setters, who have announced a warning about their probable impact on financial stability. According to a recent report, these stablecoins could transmit volatility more abruptly than other cryptocurrencies.

Targeted Restrictions to Prevent Financial resources Flight

The report outlines a particular concern regarding foreign currency-denominated stablecoins. If these stablecoins become easier and cheaper to hold in large quantities compared to foreign currency bank accounts, there is a risk of rapid financial resources flight or reversals. This could have serious consequences for the stability of financial systems.

The Risks of Stablecoins

READ NOW
Exploring the Unique Features of Bancor Coin: Enabling Continuous Liquidity on the Blockchain

Although while stablecoins can facilitate numerous transactions, they likewise come with distinct dangers. These dangers include the maintenance of a stable value and dependency on private issuers. The recent de-pegging incident of the algorithmic stablecoin terraUSD from the United States dollar serves as a real-time example of these dangers. The de-pegging caused whole lot of market losses amounting to billions of dollars.

Furthermore, the report emphasizes that worldwide stablecoins adopted by multiple jurisdictions could pose even greater dangers to financial stability. These stablecoins have the  capacity to cause whole lot of volatility and instability within the financial system.

READ NOW
Coinbase Expands its Reach in Singapore, Focusing on Crypto-Friendly Markets

Hot Take

It is critical for regulators and market participants to carefully assess the  dangers associated with stablecoins and implement targeted measures to mitigate probable threats to financial stability. Although while stablecoins offer advantages in terms of transaction efficiency, their impact on the stability of worldwide financial systems should not be underestimated.

Author – Contributor at Lolacoin.org | Website

Cora Skindell is a standout figure in the world of cryptocurrency analysis, research, and editorial expertise. As a seasoned crypto analyst and researcher, Cora’s insights delve deep into the complexities of digital assets, resonating with a diverse audience. Her ability to dissect intricate crypto concepts is complemented by her adept editorial skills, enabling her to distill complex information into easily understandable content.

READ NOW
Bitcoin Price Analysis: Bulls Take Control as Stops Above 28404 Are Absorbed – October 3, 2023
Read Disclaimer
This page is simply meant to provide information. It does not constitute a direct offer to purchase or sell, a solicitation of an offer to buy or sell, or a suggestion or endorsement of any goods, services, or businesses. Lolacoin.org does not offer accounting, tax, or legal advice. When using or relying on any of the products, services, or content described in this article, neither the firm nor the author is liable, directly or indirectly, for any harm or loss that may result. Read more at Important Disclaimers and at Risk Disclaimers.




Follow us

Latest Crypto News

Share via
Share via
Send this to a friend