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Expert cryptocurrency analysts from the International Monetary Fund (IMF) believe that stablecoins will be the future of money. As EthereumWorldNews reports, digital assets can take power away from banks as we know them. However, a lot of these groups are choosing to ignore cryptocurrencies rather than embrace or learn about them.
Stability is the future
But, according to the (IMF), it isn’t traditional cryptocurrencies that will compete with banks. It’s just stablecoins. This news comes to us from an IMF-published paper called “The Rise of Digital Money“.
The post begins:
“Alipay. Libra. M-Pesa. Paxos. Stablecoins. Swish. WeChat Pay. Zelle. All, and many others, are increasingly in our wallets as consumers and on our minds as policymakers. But how should we think of these new digital forms of money? Are they money at all, and does that matter? Will they really benefit from rapid adoption? If so, what might their implications be, on the banking sector to start with—where money is customarily created and managed today? And how might central banks react? Is there an opportunity to benefit from these rapid transformations, or just a need to regulate?”
That final question is the most interesting. Are we trying to regulate cryptocurrencies just because we always have done that for finance, or should we be trying a new form of control?Of course, the paper just doesn’t consider stablecoins to be perfect. It does say that despite these assets being pegged to fiat, there’s still the question of stability. “It is, after all, economically similar to a private investment fund guaranteeing redemptions at face value,” says the paper on stablecoins. “If 10 euros go in, 10 euros must come out,” it continues. “The issuer must be in a position to honor this pledge”.
As you may know, stablecoins are a little different than the assets you normally see on cryptocurrency exchanges. Instead, of being tied to proof-of-work consensus algorithms like Bitcoin, stablecoins are tied to a fiat currency. This gives them legitimate backing and helps non-enthusiasts trust buying cryptocurrency, at least, in the context of stablecoins it does.