It’s an important discussion to be having. That said, the question is: in what ways are stablecoins of use, to whom and under what circumstances? As fiat currency derivatives, they do not add to aggregate money stock but provide a different mechanism for accounting for the exchange of value. The promise is faster, cheaper, more secure, more private. On each front, the claims cannot be accepted without qualification. Other technologies deliver fast and cheap too, with similar or better security properties. As for privacy, stablecoins have been a favourite for illicit uses but the KYC/AML regulatory noose will tighten. The risks include de-pegging and actually high costs. Add to the risks the under-provisioning of “dollar for dollar” security and the risk is that stablecoin holders cannot redeem for want of fiat liquidity on the part of the issuer.
It’s an important discussion to be having. That said, the question is: in what ways are stablecoins of use, to whom and under what circumstances? As fiat currency derivatives, they do not add to aggregate money stock but provide a different mechanism for accounting for the exchange of value. The promise is faster, cheaper, more secure, more private. On each front, the claims cannot be accepted without qualification. Other technologies deliver fast and cheap too, with similar or better security properties. As for privacy, stablecoins have been a favourite for illicit uses but the KYC/AML regulatory noose will tighten. The risks include de-pegging and actually high costs. Add to the risks the under-provisioning of “dollar for dollar” security and the risk is that stablecoin holders cannot redeem for want of fiat liquidity on the part of the issuer.