Asia BIS Head Raises Stablecoin Concerns
(1 July 2022 – Asia) The chief representative of the Asia-Pacific Bank of International Settlements (BIS), Siddharth Tiwari, suggests stablecoins are ill-suited as a form of money and their attempt to piggyback on money issued by central banks does not give them the stability their name suggests.
The pitfalls of cryptocurrencies has been revealed by the implosion of several stablecoins such as TerraUSD which saw its value reduced to almost nothing in May from being the third-largest with a US$18.7 billion market capitalisation at its peak.
The BIS annual report released last week found central-bank digital currencies (CBDC) will form the key basis of the future monetary system.
“Recent events show that stablecoin fails to achieve the full network effect we would normally expect of money. But the innovation that they bring is important for us, and could be useful for the design of central bank digital currencies” Tiwari said.
“Ideally we would want one common platform where central-bank digital currencies can interoperate and transact, but we are not at that stage yet.”
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