Fed and Yale researchers lay out 2 regulatory frameworks for stablecoins

Fed and Yale researchers lay out 2 regulatory frameworks for stablecoins

Yale Professor Gary B. Gorton and Jeffery Zhang of the Board of Governors of the Federal Reserve System have co-authored a 49-page paper called, “Taming Wildcat Stablecoins.”

The Federal Reserve’s ongoing research into central bank digital currencies, or CBDCs, has broadened to include stablecoins and whether they can be effectively regulated. 

In their paper, which was published in SSRN’s eLibrary on July 17, Gorton and Zhang argue that “privately produced monies” such as stablecoins are “not an effective medium of exchange because they are not always accepted at par and are subject to runs.” The authors then go on to propose solutions to address what they consider to be “systemic risks created by stablecoins.”

After taking a deep dive into the history of private money, beginning with the Free Banking Era in the United States, a period from 1837 to 1864,  the researchers concluded that policymakers have two choices with respect to regulating stablecoins: make stablecoins equivalent to public money or introduce a CBDC, which entails taxing private stablecoins out of existence.

With respect to the first choice, the government could require that stablecoins be issued through FDIC-insured banks or stipulate that all stablecoins be fully collateralized by Treasuries at the Federal Reserve.

The paper made its way through Twitter on Sunday, with Avanti founder Caitlin Long making an interesting connection between the publication date and an upcoming stablecoin working group led by Treasury Secretary Janet Yellen.

Beginning July 19, Yellen will convene the President’s Working Group on Financial Markets to Discuss Stablecoins. The group brings together various regulators to assess the potential benefits and risks of stablecoins.

The discussion around stablecoins has ramped up recently, with Fed Chair Jerome Powell calling for stricter regulations of assets like Tether (USDT). In testimony before the House of Representatives on July 14, Powell said cryptocurrencies are unlikely to join the payment universe anytime soon due to their extreme price volatility.

Related: China’s central bank says crypto gave impetus to the creation of its CBDC

To date, Fed researchers have been more open to the idea of a CBDC, though unlike their counterparts in Asia and Europe, the United States has no immediate plans for a so-called digital dollar. Despite its hostile attitude towards Bitcoin (BTC), China has emerged as one of the front-runners to issue a centrally-controlled digital currency.

  • Bitcoin
  • Ethereum
  • Tether
  • Cardano
  • Polkadot
  • Binance coin
  • Dogecoin
Scan to Donate Bitcoin to 194astnfvj2nr6izGJFwG9ebRqNU7ynQYY

Donate Bitcoin to this address

Scan the QR code or copy the address below into your wallet to send some Bitcoin

Scan to Donate Ethereum to 0xe5853a1d08b3ea0bb69276b0e40cdf858968d822

Donate Ethereum to this address

Scan the QR code or copy the address below into your wallet to send some Ethereum

Scan to Donate Tether to 0xe5853a1d08b3ea0bb69276b0e40cdf858968d822

Donate Tether to this address

Scan the QR code or copy the address below into your wallet to send some Tether

Scan to Donate Cardano to DdzFFzCqrhsu1xWeeGai3gbgsbrFP26zPaVrCJqqF286carQJmAkTitRQSUCLhYLpKCotroRRNpKj7YcnAJQqpSfsHHdj8nUaitPvH4j

Donate Cardano to this address

Scan the QR code or copy the address below into your wallet to send some Cardano

Scan to Donate Polkadot to 155rGKVEanCxpi5EqGh8yh1AkGpm6bVUa7RQNydA38KzbhNu

Donate Polkadot to this address

Scan the QR code or copy the address below into your wallet to send some Polkadot

Scan to Donate Binance coin to bnb136ns6lfw4zs5hg4n85vdthaad7hq5m4gtkgf23

Donate Binance coin to this address

Scan the QR code or copy the address below into your wallet to send some Binance coin

Tag/Note:- 105346725
Scan to Donate Dogecoin to DKN9sscVgSBVyG7f9PYJq2D3BhWK5ffUmK

Donate Dogecoin to this address

Scan the QR code or copy the address below into your wallet to send some Dogecoin


Credit: Source Link

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy
WP Twitter Auto Publish Powered By : XYZScripts.com