Economists at the International Monetary Fund (IMF) are calling on policymakers around the world to address the “notable risks” of privately-issued digital currencies, otherwise known as stablecoins. Facebook’s Libra is one such example. Should central banks issue their own digital currencies?
The two economists suggest that stablecoins could undermine financial stability, and that stablecoin users risk losing their money: “Whether stablecoins are indeed stable is questionable.” It depends on the safety and availability of the underlying assets, and whether they are “protected from other creditors if the stablecoin provider goes bankrupt.”
One of the worries is that technology companies don’t have the same consumer protection rules as banks do. I look forward to seeing how this will play out. I certainly trust banks more than I do Facebook.
Check It Out: IMF Calls on Policymakers to Address Digital Currencies