ECB: Stablecoins a Less Plausible Store of Value, Term Stablecoin is Misleading

ECB: Stablecoins a Less Plausible Store of Value, Term Stablecoin is Misleading

By Abhimanyu Krishnan | News | 23 Sep 2020


The European Central Bank (ECB) issued a report on September 22 where it spoke, among other things, on stablecoins. It tentatively suggested that digital assets could be useful, but also notes that it poses risks to current systems.

  • The report discussed the implications of stablecoin on monetary policy, financial stability and the payments industry
  • The ECB Crypto-Assets Task Force, which conducted the review stablecoins, said that some inherent “fragilities within the stablecoin arrangement” could give rise to financial risks, including liquidity runs
  • Other risk specified include decentralization itself, the choice of the settlement asset and operational complexities; The risks largely have to do with the EU and Euro’s sovereignty
  • The task force believes that Euros deposits and cash are expected to be resilient against stablecoins, and that the latter is not very likely to become an alternative store of value
  • The report concludes by calling for adequate, internationally coordinated regulation and cooperative oversight

Abhimanyu Krishnan
Abhimanyu Krishnan

Technophile, cryptocurrency enthusiast and journalist.


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