https://www.coindesk.com/ecb-christine-lagarde-stablecoins-pose-serious-risksStablecoins ‘Pose Serious Risks’ to Financial Security, ECB’s Lagarde Says'In the piece, Lagarde makes a bullish case for a digital euro while throwing shade at potential rivals such as cryptocurrencies and stablecoins – digital assets the values of which are pegged to fiat currencies.
“Using stablecoins as a store of value could trigger a large shift of bank deposits to stablecoins, which may have an impact on banks’ operations and the transmission of monetary policy,” the ECB head added.
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They are starting to view it as a threat to their own banks, as competition which could take cash away from their own institutions.
As I mentioned in a previous post, I believe stablecoins are a huge development, as buying foreign currency is difficult in many countries, especially across South America, Africa and some Asian countries which might have more currency volatility and high levels of depreciation.
Hard currency is basically viewed as gold in countries with high levels of inflation and economic instability, buying USD or Euros not only allows them to hedge against devaluation of their own currency, but also make large profits which could then be converted into local currency, for instance maybe 20% or more, which beats anything provided by a bank. And that is excluding a country like Venezuela or Zimbabwe were the local currency has collapsed and this could prevent all their savings from being wiped out.
For instance, the highest interest of any country at the moment is just over 9%, and in such a country inflation will be high and they will also have to deal with local currency devaluation year-on-year, reducing their buying power internationally and making them poorer globally, through no fault of their own. This is a constant worry for people living in those countries.
