Stablecoins Can Temper US Dollar Hegemony Risks, Says Non-Profit Exec
Marie Huillet's original article for cointelegraph.com reduced by 54%
Stablecoins have the potential to temper the systemic threats posed by the United States dollar's domination of global foreign currency reserves, according to an opinion piece published by the World Economic Forum. Liu and Lyons advocate the wide-ranging potential of stablecoins to underpin a more "Sustainable, inclusive, and resilient global system" across trade and investment, banking and payments. Until today, the authors note, the U.S.
dollar continues to account for 62% of all foreign reserves held by central banks, as IMF data for Q1 2019 has demonstrated. Dollar hegemony perpetuates the systemic threats forcibly evinced in the 2008 financial crisis, when global investors flocked to dollar-denominated safe-haven assets, generating a precipitous global liquidity crunch. "A global scarcity of USD creates major headwinds for US exporters, widening the trade deficit and pressuring economic growth." Failing this, a single stablecoin - whether privately- or central bank-issued - itself risks becoming systemically dominant and simply replicating the dollar's fiat hegemony with a digital analogue, they note.
Yesterday, European Central Bank board member Benoit Coeure warned that global stablecoins remain untested and could threaten the "Autonomy and resilience of European payments systems..
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