The International Monetary Fund (IMF) stated, "Stablecoins could seriously disrupt the current global payment framework."

The International Monetary Fund (IMF) recently published a study on its blog, suggesting that stablecoins could potentially disrupt the current global payment framework. However, they could also contribute to improving global financial inclusion.

Adoption of Stablecoins

IMF claims that stablecoins pose many risks to the global financial system, one of which is the potential disintermediation of the financial sector. Banks would be the first institutions affected as stablecoins provide users with direct opportunities for domestic and cross-border payments.

However, banks are not sitting idly by. They can try to maintain their monopoly by innovating and creating their own cryptocurrencies. Recently, European regulators have highly praised Central Bank Digital Currencies (CBDCs) over privately issued stablecoins. The IMF points out:

The widespread adoption of new forms of money will depend on their attractiveness as stores of value and payment mechanisms.

Since the release of Facebook's Libra project whitepaper, the possibility of governments issuing digital currencies has once again become a hot topic. Previous reports have shown a high level of interest from authorities in countries such as Uruguay, the Bahamas, China, the Eastern Caribbean Currency Union (ECCU), Sweden, and Ukraine.

Reports indicate that Swiss National Bank Chairman Thomas Jordan recently discussed the potential of national digital currencies pegged to fiat currencies, suggesting they could serve as alternatives to traditional currencies.

Risks of Stablecoins

The IMF believes another potential risk is government capital controls. With Facebook, which has 2.4 billion users, able to compete with global currencies like the U.S. dollar, it could lead to financial monopolies. The IMF states:

Additionally, if public funds are deposited with stablecoin service providers, banks may lose their intermediary role. However, banks are unlikely to disappear and will compete through innovation and higher interest rates. In simple terms, banks are not likely to vanish.

The IMF also mentions that stablecoins could facilitate illicit activities, potentially becoming channels for money laundering and other illegal financial activities. Service providers must demonstrate how they will prevent their networks from being used for money laundering and terrorist financing activities through international standards.

Telegram, a major competitor to Libra, may launch ahead of Libra to gain a competitive advantage. Jelezko, a partner at major investor Da Vinci Capital, stated:

Telegram and Libra are in a "race" because they target the same users, both projects aim to provide cross-border payments, and target countries where cash-based or lack of trust in their fiat currencies prevail.

According to previous reports, Telegram's native token GRAM seems close to launch, while Libra is still in discussions with regulators worldwide.

Further Reading

• Bitwise presents three arguments to the SEC and states, "The market is ready for a Bitcoin ETF."
• North Korea reportedly plans to create its own cryptocurrency in an attempt to circumvent the U.S.-dominated global financial system.

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