Stablecoins and DeFi Make Central Bank Currencies ‘Urgent’

Full article by Scott Chipolina found here.

Key points:

• Main pillars of the cryptocurrency industry such as stablecoins and DeFi threaten the worlds’ central banks according to Benoit Coeure, head of the Bank for International Settlements’ (BIS) Innovation Hub.

• Decentralized finance (DeFi) recreates many services offered in traditional finance such as lending, borrowing, and exchanges by replacing banks and brokers with automated code.

• Coeure is a firm believer in central banks and the role they play in society by delivering price stability and financial stability. He recognizes that central bank digital currencies will take years to release, while stablecoins and other crypto assets are already available.

• While the BIS states that “stablecoins attempt to import credibility by being backed by real currencies”, Coeure has stated “make no mistake: global stablecoins, DeFi platforms, and big tech will challenge bank models regardless”.

• China is largely seen as the leading nation in terms of releasing a central bank digital currency. The digital yuan has been in development since 2017, and has already airdropped millions worth of digital yuan to citizens across the country as a test.