Stablecoin News for the week ending Tuesday 25th August


Central Bankers should be very wary!

Here is our pick of the 3 most important Stablecoin news stories during the week.

This week we saw concern that if Central Bankers wade into the Digital Currency market too quickly they would not only expose themselves to reputational risk but also the sovereign government that is behind them.

The Financial Times led with a major article outlining the risks, saying that thanks to Facebook and the Peoples Bank of China, Central Bankers have no choice but to jump in, they should pause and consider the risks very carefully.  Clearly the FT would have preferred the status quo of nothing happening and Crypto being confined to a very small corner of the Financial Marketplace, but if things are going to happen then it should be slowly and controlled.

Central banks should not rush into digital currencies

Meanwhile, the G30 released a report that highlights the key issues that policymakers have to consider in responding to these developments. These include:

  1. Central Banks and Finance Ministries must play an active leadership role in setting standards and providing public infrastructure for payments, which cannot be left to market forces alone.
  2. New technologies may require a sufficiently long phase-in period in order to be tested fully. Multiple payment alternatives should be introduced so that the payments system gains a measure of resilience and includes adequate competition.
  3. Existing technologies that allow faster retail payments, which drastically increase competition and lower costs to businesses and consumers, should be implemented more widely.
  4. Policy consideration of a direct (full retail) central bank digital currency (CBDC) should take into account the possible concentration of risk, disintermediation of traditional lending institutions, and excessive government control of credit allocation, which would be counterproductive in today’s diverse modern economies.
  5. Before implementing any type of CBDC, its impact on various aspects of the economy should be evaluated very carefully, among them its effect on monetary policy transmission, on the safety and integrity of the financial system, and on the emergence of alternative options such as indirect/hybrid CBDCs.
  6. As the payments system becomes more digital, it will be important to find a balance between the protection of individual data and privacy versus the government’s imperative to enforce laws, regulations, and taxes. The issues in payments need to be examined holistically, along with other privacy concerns arising from data gathering by banks, large tech companies, and governments.
  7. Importantly, the increased cross-border use of digital currencies necessitates an international framework for governing data usage and exchange.

G30 on Digital Currencies: Balance Needs to be Struck Between Protection and Privacy

China’s central bank (PBoC) has played down rumors of a property transaction settled with its in-the-works digital currency, saying that current tests only involve small transactions.

PBoC Says Digital Yuan Tests Focus on Small Transactions After Rumored Property Sale

So in summary, we have the Financial Markets establishment paper the FT calling  for caution, the G30 outlining all the risks and PBoC who are the most advanced in terms of trailing a CBDC assuring us it is locked down to just small transactions.  We are most definitely at the learning to crawl stage and nobody wants to follow the Silicon Valley mantra of “move fast and break things”. 


Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.  

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.

For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives. 


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