stablecoins are genuine innovation, says Fed Governor Waller

Fed Governor Waller praised the innovation of stabelcoins and described them as a genuine innovation. 

On 17 November, speaking on the Central Bank Digital Currency (CBDCs), Christopher J. Waller – Governor at Federal Reserve- shared his sceptical point of view on the implementation of the Central Bank Digital Currency in the US. 

According to Waller, there are many innovations in the private sector and all these are better and innovative. In particular, stabelcoins area genuine private-sector payment options there is no need for CBDCs implementation. 

stablecoins are genuine innovation, says Fed Governor Waller 1
Top Stablecoins by Market Capitalization | Source: Treasury Report on Stablecoins (Nov. 2021)

However, Waller appreciated the existence of stable coins but still, they reminded about the associated risks with stablecoins. According to waller, there is a potential destabilizing run, where stablecoins issuer may not do their work at their best. As they are unregulated issuers of stablecoins, so there are chances of some risk for the Stablecoin investors.

The second thing at which Waller pointed is decentralization. According to Waller, due to the decentralization system stablecoins based payments and operations are distributed over the whole network. If in any case, it will fail then in that situation a big issue may arise. 

In actuality, Waller tried to say that if any failure will take place then in that situation who will be responsible? 

On The third problem with Stablecoin adoption, Waller said that because of the single Stablecoin issuer, there may be chances of monopoly and that could lead to a risk to the competition, which will end up low profit for the consumers. 

Further, Waller appreciated these things and also said that they will give chances to evolve these innovations in competition with the banks. 

“That innovation can come from outside the banking sector, and we should not be surprised when it crops up in a commercial context, particularly in Silicon Valley. (….) We should give those innovations the chance to compete with other systems and providers —including banks — on a clear and level playing field”

Through this statement, Waller hinted that US authorities will launch their CBDCs but still regulation and options will remain open for stablecoins to evolve. 

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