Topic: FSB on Global Stable Coins (GSC) (Read 135 times)

Well, here is my personal opinion. There are no propositions stated in this article so I may not be able to know if it is really just to have the GSC. Though there will be a lot of issues and concerns that must be addressed, --this Gsc may really eat other currencies but we cannot conclude if it will give us a better economy or might as well worsen the industry. The Creator of GSC perhaps has there own ideas in addressing these concerns and why they should want to have one world currency.

The idea of global stablecoins died the second Libra published its intentions. Unless it comes direct from the heart of government or central banking such a thing will never, ever, ever be permitted to exist. End of.

There's no crypto impact.

The ban on DAI is legally questionable because the DAI is not directly tied to the dollar ramp like Tether.

1. Characteristics of global stablecoins

Similarly, the attribute global refers to a stablecoin with a potential reach and adoption across multiple
jurisdictions and the potential to achieve substantial volume, thus posing financial stability
risks, rather than a specific legal or regulatory concept.

Risks and vulnerabilities raised by global stablecoins

2.1.Potential risks to financial stability from a GSCGSCs could pose financial stability risks through some key channels: First, if a GSC were used as a common store of value, even a moderate variation in its value might  cause  significant  fluctuations  in  users’  wealth.  Such  wealth  effects  may  be  sizeable  enough to affect spending decisions and economic activity. Wealth effects may be particularly pronounced in EMDEs where the likelihood of GSCs becoming a mainstream store of value may be higher than in advanced economies (AE). Second, if widely used for payments, any operational disruption in the GSC arrangement might have significant impacts on economic activity and financial system functioning. If users relied upon a stablecoin to make regular payments, significant operational disruptions could quickly affect  real  economic  activity,  e.g.  by  blocking  remittances  and  other  payments.  Large-scale flows of funds into or out of the GSC could test the ability of the supporting infrastructure to handle high transaction volumes and the financing conditions of the wider financial system.

2.2.Vulnerabilities arising from the functions and activities of a GSC arrangementWhile the significance of the individual channels discussed above depends on what a GSC is used for and how widely it is used, the vulnerability of the GSC itself to shocks depends on how the functions  and  activities of  the  GSC  arrangement  are  designed  and  performed.  A  scenario  analysis  conducted  by  the FSB  identifies  three  main  types  of  vulnerabilities.   This scenario analysis focuses on asset-linked GSCs that have reserve assets and where the user has the ability to redeem the GSCs.