“Primitive” stablecoin lacks mechanisms to maintain fiat stability: BIS

THE answer Again East regulation, although This time THE suggested regulation looks A plot as central bank co-optation.

Stablecoins lack crucial mechanisms that guarantee money walk stability In decree, And A operational model that gave regulatory control has A central bank would be be superior has private stable part, A study released by THE Bank For International Regulations (BIS) found.

THE authors used A "money see" of stable coin And A analogy with down And off the coast USD regulation has probe THE weaknesses of stable coin regulation mechanisms.

By THE study:

"In both Euro dollar And Effects the steps, When private bank credit reached THE boundaries of It is elasticity [that East, lose THE ability has maintain by], central bank credit not In, with THE ultimate aim of protect by In global dollar regulation. »

When Euro dollar holders research has bring their funds down during THE financial crisis of THE late 2000s, THE Federal Reserve provided A $600 billion liquidity to exchange has other central banks has shore up by using What THE authors describe as “non-trivial institutional device. »

Related: BOÉ governor trash cans crypto, stable coins In service of 'improved digital money'

Stablecoins bridge in chain And off-chain funds And maintain by with THE decree USD with up has three "superficial" mechanisms: through reserves, oversizing and or A algorithmic trade protocol.

Reserves, Above all, are "A equivalent value of short term on dollar assets." Stablecoins by mistake assume their solvency — THE ability has meet long term request — base on their liquidity — THE ability has Me...