The deputy governor of the Bank of England has said stablecoins are starting to behave more like private money.
Cunliffe explains the bank is running programmes with Gemini and others to better understand how this cryptocurrency space works. Deputy governor of the Bank of England (BoE) has said that stablecoins are useful for payments, bank reserves and regulation.
First, Cunliffe hinted at the launch of a financial institution digital currency (CBDC) and therefore the benefits of using stablecoins. With the increase in both card and digital payments in UK, it is important to note that this will lead to a further diversion away from cash, with mobile money and banking likely to gain ground.
Stablecoins can a haven; their 1:1 value to fiat keeps them useful in any country or situation. Stablecoins are also easy to send all around the world with no tradings costs; the money transfer is instant and borderless. Stablecoins are the first form of cryptocurrency, allowing for borderless money transfers. Its primary purpose is to be easily manageable by anyone. Therefore, Stablecoins are mainly used as a unit of account rather than a medium of exchange.
And for Cunliffe, such technology could change the way money is transferred and shared with the public:
“There are, however, on the near horizon newer technologies and innovations, like tokenization and distributed ledger, which can further transform the cash we use. Stablecoins are probably the simplest known of those. Their proponents claim that these have the potential radically to scale back the prices of digital money and to extend its functionality and therefore the things it can do.”
Cunliffe says that the proponents of those newer sorts of money aren’t banks or financial institutions, but technology companies who are looking to integrate new sorts of money into services. supported their other data.
He explained:
“This has attracted enormous attention, including from public authorities, just like the Bank of England, who is now wrestling with the thorny question of what regulatory framework should apply to non-bank issuers of personal money.”
However, that doesn’t mean folding money is going to be phased out soon:
“The Bank of England is committed to creating physical cash, banknotes, available as long as there’s demand for it and is functioning with other authorities to support continued access to cash.”
The deputy governor said the need for cash is unlikely to completely disappear soon, because too few people have access:
“Many still believe it for A variety of reasons.”
The stablecoin sector is now worth $95 billion and accounts for 4.07% of the whole crypto money. USD-based coins like Tether ($56 billion), USD Coin ($14 billion), and Binance USD ($7.8 billion) are the first and the main leaders, then following with the likes of TerraUSD ($2 billion) and Paxos ($1.1 billion) that will catch up soon.
