Cryptocurrency

ECB: Pound as the representative of the stablecoins

The European Central Bank (ECB), considered to be the Stablecoins and Pound as the financial innovations. Mainly, have the potential to improve the efficiency of the services.

What are the Stablecoins?

Are digital Tokens that are created to maintain a stable value. Although the most common are tied to Fiat currency (dollar, euro, etc). They seek to provide a means of payment stable. Therefore, the Stablecoins were originally developed for use in the trading of crypto assets. But, the current initiatives have a much broader scope. In a recent comprehensive report on Stablecoins world, the European Central Bank (ECB), and cited by some risks and potential regulations for these Tokens.

Regulations of the European Central Bank (ECB)

Given that combine several functions are unequal, the regulations of the Stablecoins can fall under different supervisory regimes. One of the agreements would be the function of asset management. Being the most important, that these have the potential to be a major source of risk. Another significant area, is the transfer function with the relevant components of a global regulation of the Stablecoins.

Features of the Stablecoins

These aim to provide an alternative to the volatile cryptocurrencies. Possess three key traits: Payments: covers the functionality crucial to transfer, by means of which the Stablecoins are used as a means for making payments and transferring value.Asset management: investing the income from the issuance of Stablecoin in safe assets low volatility.User interface: provides the means to link the end-users with other functionalities.

Risks of the spread of the Stablecoins

For financial stability, if a regulation of a Stablecoin reaches a global scale, any malfunction could pose a potential risk: The risk of a run on liquidity that affects the world’s economies.The risk of the spread of contagion to the financial system. This represents a conflict for the transmission of the danger to the traditional economy.

Global agreements with Pound

It has been chosen to Pound as an example by the ECB to represent the stablecoins. Because it has the potential to grow quickly. Due, in large part to the network effects arising from its user base to global. In addition, the fact that Facebook can make available significant resources to support the massification of the project. To quantify the potential size of the ecosystem of a Pound. You need to determine both the number of users like the properties, the average user. Pound has 2,400 million users on Facebook. To conclude we would say that the Stablecoins could help to address the unmet demand of consumers for payment services.

Did you like the content? Share it

About the author

Caroline W.

Caroline is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2018, she joined CurrencyMarket24 as a writer.

Cryptocurrency Market