Built to fall? As the CBDC sun rises, stablecoins may catch a shadow
Will central banks allow stablecoins to survive? Perhaps as a financial instrument for the unbanked where they can co-exist peacefully?
Analysis
There's a buzz when it comes to central bank digital currencies (CBDCs), and most people really don't know what to expect. Various effects seem to be bubbling up in different parts of the world.
Consider: China's e-CNY has already been used by over 200 million of its citizens and a full rollout could happen as early as February; but will a digital yuan gain popularity internationally? The European Central Bank has been studying a digital euro for several years, and the European Union could introduce a digital euro bill in 2023. But will it come with limits, such as a cap on digital euros that can be owned by one party? A US digital dollar might be the most anticipated government digital currency given that the USD is the world's reserve currency, but when, if ever, will it appear? Implementation could take at least five years.
Amidst all this uncertainty, one question lingers, at least in the cryptoverse: what impact will digital currencies from major economies have on stablecoins? Would that leave them with oxygen to breathe?
On the positive side, some believe that most large-scale CBDCs will go wholesale, i.e. allowing direct access to digital currency by a limited number of large financial institutions. If so, could this leave a "retail coin" for stablecoins in the payments industry?
“Their wallets or accounts may be held by intermediaries such as commercial banks, which then have claims on the central bank. But effectively, most CBDCs will be used for retail payments,” said Gerard DiPippo , senior researcher at the Center for Strategic & International Studies, to Cointelegraph: “This includes the Chinese e-CNY, which many believe will be the first major CBDC economy to be deployed at scale.”
"Although it's still early to make a call,...
Will central banks allow stablecoins to survive? Perhaps as a financial instrument for the unbanked where they can co-exist peacefully?
Analysis
There's a buzz when it comes to central bank digital currencies (CBDCs), and most people really don't know what to expect. Various effects seem to be bubbling up in different parts of the world.
Consider: China's e-CNY has already been used by over 200 million of its citizens and a full rollout could happen as early as February; but will a digital yuan gain popularity internationally? The European Central Bank has been studying a digital euro for several years, and the European Union could introduce a digital euro bill in 2023. But will it come with limits, such as a cap on digital euros that can be owned by one party? A US digital dollar might be the most anticipated government digital currency given that the USD is the world's reserve currency, but when, if ever, will it appear? Implementation could take at least five years.
Amidst all this uncertainty, one question lingers, at least in the cryptoverse: what impact will digital currencies from major economies have on stablecoins? Would that leave them with oxygen to breathe?
On the positive side, some believe that most large-scale CBDCs will go wholesale, i.e. allowing direct access to digital currency by a limited number of large financial institutions. If so, could this leave a "retail coin" for stablecoins in the payments industry?
“Their wallets or accounts may be held by intermediaries such as commercial banks, which then have claims on the central bank. But effectively, most CBDCs will be used for retail payments,” said Gerard DiPippo , senior researcher at the Center for Strategic & International Studies, to Cointelegraph: “This includes the Chinese e-CNY, which many believe will be the first major CBDC economy to be deployed at scale.”
"Although it's still early to make a call,...
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