New York Fed: Stable coins are not the future of payment

Researchers in New York Federal Reserve do not seem to get enough articles about stabilizing coins.

In a team of the US Central Bank Branch, a few days after the length of the stable currency deposit regulatory framework, a separate research team wrote a paper, explaining why stable coins are not the future payment.

In the paper published on Monday, four researchers believe that if distributed book technology (DLT) is integrated into traditional finance, stabilizing currency is not the best way to transfer funds. Researchers are the Economics Professor Rod Garratt, the University of St. Barbala, California, and the New York Reserve Research and Statistics Group of Michael Lee and Antoine Martin and Joseph Torregrossa of the Legal Group.

Liquidity problem

In order to keep the stable currency stable, they are linked to assets that are considered safe, such as the US dollar. According to analysts, stable coins unnecessarily occupy assets.

Researchers said: “Bundle Safety and Flow Assets in stable currency arrangements means they cannot be used in other purposes, such as helping banks to meet regulatory requirements to maintain sufficient liquidity.” They said that using stable coins may lead to safety and flow Asset shortage.

Tether is the largest municipal value of stable currency USDT issuers, it is well known that it is one of the largest commercial ticket holders in the United States. According to Tether, USDT in circulation is approximately $ 78 billion.

Analysts said that there is no steady curminin of fluidity, such as algorithm-based stability currency, is considered to be large and low alternative.

The researchers quoted a papers of Gary B. Gorton and Jeffery Zhang, who believed that stabilization can be compared to private bank notes issued by the “Free Bank” era of China in the middle of the 18th century.

“Private banknotes are irreplaceable, handling their individual needs to consider whether to accept any face-to-face value,” analyst said, and supplementing that the history of private banknotes indicate that stability currency may encounter the same problem.

Currency deposit rather than stable coins

“The most recent analysis emphasizes the benefits of maintaining the central status of banks in the payment system,” research report said. The author puts forward a question, that is, if the central bank can issue a Currency deposit, why is it necessary to use stable coins.

“Although some practical details are required, the principles behind the Currency deposit are simple. Bank depositors will be able to convert their deposits into digital assets (Currency deposits), which can be circulated on the DLT platform. These generations The currency deposit will represent the creditor’s creditor’s credit, just like ordinary deposits, “researchers wrote.

Currency deposits will also take advantage of existing payment infrastructure.

“Customers can use these deposits to commodities or services using well-operated existing payment infrastructure,” the file pointed out. “Merchants who receive these funds based on deposit-based payment systems don’t have to worry about these funds; they transfer them with standard rods.”