Facebook’s Libra digital currency proposal has sent a wake-up call to international authorities, finance ministries and central bank governors. All of these representatives realized that the company’s reach across its three platforms could potentially accelerate the adoption of a globally stable currency to an outstanding degree.
In a new paper for the Bank for International Settlements, three analysts suggest that the news of Libra and other proposed global stable currencies requires regulators to consider their ability to monitor and monitor issuance and circulation.
Analysts wrote that Libra’s potential for rapid mass adoption in multiple jurisdictions requires government to develop dynamic and adaptive tools for monitoring and enforcement. While complex, they argued that the stability of the digital currency alone could provide new enforcement mechanisms:
Stablecoin offers is an area where built-in controls can work in practice. Information is a key regulatory function, both in terms of improving market productivity and efficiency, and in terms of supervision, whether it is for market security, customer and investor protection or supervision.
This “built-in control” makes direct and automated reporting of data a registration obligation for all potential stablecoin issuers.
This is already true for some of today’s volatile digital payment platforms such as Alipay and WeChat Pay in China, analysts say.
Stable currencies using distributed ledger technology can generate secure information and support automated ledger monitoring, reducing the need for issuers to collect, verify and release data to government agencies.
In general, the introduction of the built-in steyblkoinami management has three goals: to reduce the cost of compliance and thus even the rules of the game for large and small, private subjects; Development of a set of overarching tools for open source monitoring that can demonstrate how the regulations are applied; And to provide legal completion of payments that are still different from financial and contractual.
After carefully analyzing the various problems this model poses, the authors argue that the best solution would be to include fiat currencies in a similar model.
The central bank’s digital currencies or CBDCs will not give the same “conflicts of interest” as private sector stablecoins. Thus, the authors conclude that stack coins can be an experimental proposal, pointing the way to innovation within the current system, and not outside it:
“Just as stable currencies in recent centuries […] were an evolutionary step on the road to central banks, today’s stable currencies may give way to other reforms. This may include strong alternatives supported by sovereign states and new ways of linking central bank funds across the border. “