Federal Reserve Attorney says Stablecoins are not an “effective medium of exchange”
Federal Reserve Attorney and Yale Professor recommended a supervision on StableCoin so that they can restrict or regulate them in perfect rules.
On 17 U.S authorities decided to hold a meeting regarding the procedure to regulate StableCoins on 19 July. Today after the meeting, the Federal Reserve Attorney published a research paper of the discussion result of the meeting.
Related: A Meeting On StableCoin By U.S Regulators On 19 July
This research paper was published by the Social Science Research Network (SSRN) by a professor from Yale and member of the Board of Governors of the Federal Reserve authority. They said that we should take an overview in StableCoin and recommended supervision of the stablecoin ecosystem.
Professor Gary B. Gorton and Jeffery Zhang said in a two-sided way and they didn’t point out their point against StableCoin totally.
According to them, Stable Coins may lead to systematic risks and stable coins should be regulated in a central system. Under their regulation recomments plan they will restrict stablecoins to behave like a Bank that will issue StableCoins in the market. And also they said that they can introduce central bank digital currency with them for perfect centralisation.
Author also said that virtual currencies are blindly taking place in the market and that these private virtual currencies have nothing new about privately produced money. StableCoins coins are not a better option to exchange cryptocurrency and are not an effective medium for exchanges. Probably they hey targeted USDT and Libra like coins.
“privately produced monies are not an effective medium of exchange because they are not always accepted at par and are subject to runs. We present proposals to address the systemic risks created by stablecoins, including regulating stablecoin issuers as banks and issuing a central bank digital currency.”
They also called these StableCoins “Wildcat” that can be a part of authorised financial ecosystem of the present time but in that situation where stablecoin issuers companies become the money market funds for the 21st century financial ecosystem.
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