The answer again is regulation, although this time the suggested regulation looks a lot like central bank co-option.
Stablecoins lack crucial mechanisms that guarantee money market stability in fiat, and an operational model that gave regulatory control to a central bank would be superior to private stablecoin, a study released by the Bank for International Settlements (BIS) found.
The authors used a “money view” of stablecoin and an analogy with onshore and offshore USD settlement to probe the weaknesses of stablecoin settlement mechanisms.
Per the study:
“In both Eurodollar and FX markets, when private bank credit reaches the limits of its elasticity [that is, loses the ability to maintain par], central bank credit steps in, with the ultimate goal of protecting par in global dollar settlement.”
When eurodollar holders sought to bring their funds onshore during the financial crisis of the late 2000s, the Federal Reserve provided a $600 billion liquidity swap to other central banks to shore up par using what the authors described as “non-trivial institutional apparatus.”
Related: BOE governor trashes crypto, stablecoins in favor of ‘enhanced digital money’
Stablecoins bridge on-chain and off-chain funds and maintain par with the fiat USD with up to three “superficial” mechanisms: through reserves, overcollateralization and/or an algorithmic trading protocol.
Reserves, crucially, are “an equivalent value of short-term safe dollar assets.” Stablecoins mistakenly assume their solvency — the ability to meet long-term demand — based on their liquidity — the ability to meet short-term demand, whether they depend on reserves or an algorithm, according to the authors.
In addition, reserves are unavoidably tied to the fiat money market. This ties stablecoin stability to fiat money market conditions, but during economic stress, there are mechanisms in place to attempt to maintain bank liquidity both onshore and offshore. Stablecoin lacks such mechanisms. One example the authors gave was the banking crisis of this year:
“Central banks were probably surprised to find that lender of last resort support for Silicon Valley Bank in March 2023 was also in effect lender of last resort for USDC, a stablecoin that held substantial deposits at SVB as its purportedly liquid reserve.”
Furthermore, stablecoins have to maintain par among themselves. Bridges are another sore point. The authors compare blockchain bridges to foreign exchange dealers, which are highly dependent on credit to absorb imbalances in order flow. Stablecoins are unable to do that. The higher interest rates common on-chain only make their task more difficult.
Ok boomer
— psswrd12345 (@psswrd12345) November 17, 2023
The study suggested that the Regulated Liability Network provides a model solution to the difficulties faced by stablecoin. In that model, all claims are settled on a single ledger and are inside a regulatory perimeter. “The commitment of a fully-fledged banking system that would include the central bank and thus have a credibility that today’s private crypto stablecoins lack,” the authors said.
The BIS has been paying increased attention to stablecoins. It released a study earlier in November that examined examples of stablecoins failing to maintain their pegged value. That, as well as the legislative attention stablecoin has been receiving in the European Union, United Kingdom and United States, is testimony to its increasing role in finance.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
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09.10.25 11:05
marcushenderson624
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09.10.25 11:05
marcushenderson624
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09.10.25 11:05
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09.10.25 11:05
marcushenderson624
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12.10.25 01:12
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12.10.25 21:36
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robertalfred175
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14.10.25 08:46
robertalfred175
CRYPTO SCAM RECOVERY SUCCESSFUL – A TESTIMONIAL OF LOST PASSWORD TO YOUR DIGITAL WALLET BACK. My name is Robert Alfred, Am from Australia. I’m sharing my experience in the hope that it helps others who have been victims of crypto scams. A few months ago, I fell victim to a fraudulent crypto investment scheme linked to a broker company. I had invested heavily during a time when Bitcoin prices were rising, thinking it was a good opportunity. Unfortunately, I was scammed out of $120,000 AUD and the broker denied me access to my digital wallet and assets. It was a devastating experience that caused many sleepless nights. Crypto scams are increasingly common and often involve fake trading platforms, phishing attacks, and misleading investment opportunities. In my desperation, a friend from the crypto community recommended Capital Crypto Recovery Service, known for helping victims recover lost or stolen funds. After doing some research and reading multiple positive reviews, I reached out to Capital Crypto Recovery. I provided all the necessary information—wallet addresses, transaction history, and communication logs. Their expert team responded immediately and began investigating. Using advanced blockchain tracking techniques, they were able to trace the stolen Dogecoin, identify the scammer’s wallet, and coordinate with relevant authorities to freeze the funds before they could be moved. Incredibly, within 24 hours, Capital Crypto Recovery successfully recovered the majority of my stolen crypto assets. I was beyond relieved and truly grateful. Their professionalism, transparency, and constant communication throughout the process gave me hope during a very difficult time. If you’ve been a victim of a crypto scam, I highly recommend them with full confidence contacting: 📧 Email: [email protected] 📱 Telegram: @Capitalcryptorecover Contact: [email protected] 📞 Call/Text: +1 (336) 390-6684 🌐 Website: https://recovercapital.wixsite.com/capital-crypto-rec-1
14.10.25 08:46
robertalfred175
CRYPTO SCAM RECOVERY SUCCESSFUL – A TESTIMONIAL OF LOST PASSWORD TO YOUR DIGITAL WALLET BACK. My name is Robert Alfred, Am from Australia. I’m sharing my experience in the hope that it helps others who have been victims of crypto scams. A few months ago, I fell victim to a fraudulent crypto investment scheme linked to a broker company. I had invested heavily during a time when Bitcoin prices were rising, thinking it was a good opportunity. Unfortunately, I was scammed out of $120,000 AUD and the broker denied me access to my digital wallet and assets. It was a devastating experience that caused many sleepless nights. Crypto scams are increasingly common and often involve fake trading platforms, phishing attacks, and misleading investment opportunities. In my desperation, a friend from the crypto community recommended Capital Crypto Recovery Service, known for helping victims recover lost or stolen funds. After doing some research and reading multiple positive reviews, I reached out to Capital Crypto Recovery. I provided all the necessary information—wallet addresses, transaction history, and communication logs. Their expert team responded immediately and began investigating. Using advanced blockchain tracking techniques, they were able to trace the stolen Dogecoin, identify the scammer’s wallet, and coordinate with relevant authorities to freeze the funds before they could be moved. Incredibly, within 24 hours, Capital Crypto Recovery successfully recovered the majority of my stolen crypto assets. I was beyond relieved and truly grateful. Their professionalism, transparency, and constant communication throughout the process gave me hope during a very difficult time. If you’ve been a victim of a crypto scam, I highly recommend them with full confidence contacting: 📧 Email: [email protected] 📱 Telegram: @Capitalcryptorecover Contact: [email protected] 📞 Call/Text: +1 (336) 390-6684 🌐 Website: https://recovercapital.wixsite.com/capital-crypto-rec-1
15.10.25 18:07
crypto
Cryptocurrency's digital realm presents many opportunities, but it also conceals complex frauds. It is quite painful to lose your cryptocurrency to scam. You can feel harassed and lost as a result. If you have been the victim of a cryptocurrency scam, this guide explains what to do ASAP. Following these procedures will help you avoid further issues or get your money back. Communication with Marie ([email protected] and WhatsApp: +1 7127594675) can make all the difference.
15.10.25 21:52
harristhomas7376
"In the crypto world, this is great news I want to share. Last year, I fell victim to a scam disguised as a safe investment option. I have invested in crypto trading platforms for about 10yrs thinking I was ensuring myself a retirement income, only to find that all my assets were either frozen, I believed my assets were secure — until I discovered that my BTC funds had been frozen and withdrawals were impossible. It was a devastating moment when I realized I had been scammed, and I thought my Bitcoin was gone forever, Everything changed when a close friend recommended the Capital Crypto Recover Service. Their professionalism, expertise, and dedication enabled me to recover my lost Bitcoin funds back — more than €560.000 DEM to my BTC wallet. What once felt impossible became a reality thanks to their support. If you have lost Bitcoin through scams, hacking, failed withdrawals, or similar challenges, don’t lose hope. I strongly recommend Capital Crypto Recover Service to anyone seeking a reliable and effective solution for recovering any wallet assets. They have a proven track record of successful reputation in recovering lost password assets for their clients and can help you navigate the process of recovering your funds. Don’t let scammers get away with your hard-earned money – contact Email: [email protected] Phone CALL/Text Number: +1 (336) 390-6684 Contact: [email protected] Website: https://recovercapital.wixsite.com/capital-crypto-rec-1
15.10.25 21:52
harristhomas7376
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