Stablecoins and Central Bank Digital Currencies: Policy and Regulatory Challenges

Stablecoins and central bank digital currencies are on the horizon in Asia, and in some cases have already arrived. This paper provides new analysis and a critique of the use case for both forms of digital currency. It provides time-varying estimates of devaluation risk for the leading stablecoin, T...

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Bibliographic Details
Published in:arXiv.org 2022-02
Main Authors: Eichengreen, Barry, Viswanath-Natraj, Ganesh
Format: Article
Language:English
Subjects:
Central banks
Currency
Digital currencies
Online Access:Get full text
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Summary:Stablecoins and central bank digital currencies are on the horizon in Asia, and in some cases have already arrived. This paper provides new analysis and a critique of the use case for both forms of digital currency. It provides time-varying estimates of devaluation risk for the leading stablecoin, Tether, using data from the futures market. It describes the formidable obstacles to widespread use of central bank digital currencies in cross-border transactions, the context in which their utility is arguably greatest. The bottom line is that significant uncertainties continue to dog the region's digital currency initiatives.
ISSN:2331-8422