BIS Sounds Alarm: Stablecoins and Sovereignty at Risk
The Bank for International Settlements cautions against stablecoins' potential to undermine monetary sovereignty and urges swift tokenization of currencies. Concerns include risks of capital flight from emerging economies and the lack of regulation. Stablecoins are pegged to real-world assets, yet pose risks without traditional central bank oversight.
The Bank for International Settlements (BIS) has issued a stern warning about the risks posed by stablecoins, urging nations to accelerate towards tokenizing their currencies.
Known as the central bank for central banks, the BIS highlighted concerns about stablecoins potentially undermining monetary sovereignty, transparency issues, and risks of capital flight from developing economies. This warning follows the U.S. Senate's passage of a bill to establish a regulatory framework for U.S.-dollar-pegged stablecoins.
Stablecoins are cryptocurrencies maintaining a steady value, often pegged 1:1 with the dollar and backed by assets like U.S. Treasuries or gold, dominating the market with an estimated $260 billion in circulation. The BIS criticizes stablecoins' inadequacies compared to central bank-issued money, urging for immediate regulatory measures.
(With inputs from agencies.)
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