Non-profit Organization: Stablecoins can reduce the risk of overreliance on the US dollar.

According to a recent article published by the World Economic Forum (WEF), stablecoins could potentially alleviate the potential threat to the dominance of the US dollar in global foreign exchange reserves, making the global economy more stable.

The discourse was presented in an article by Fusion Foundation and Lapa Capital at the World Economic Forum.

Fusion Foundation is a non-profit organization dedicated to developing blockchain infrastructure for the global financial sector; Lapa Capital is a New York-based venture capital firm.

US Dollar Accounts for 62% of Central Bank Reserves

The article mentions the advantages of stablecoins, believing they have broad potential to provide a sustainable, inclusive global financial system in trade, investment, banking, and payment areas.

According to a report, the author cited statistics from the International Monetary Fund (IMF) in the first quarter of this year, highlighting that the US dollar still accounts for 62% of all central bank foreign exchange reserves. The article emphasizes:

The dominance of the US dollar posed a systemic threat during the 2008 financial crisis, where global investors rushed to liquidate dollar-denominated hedge assets, leading to a global liquidity squeeze.

Furthermore, the continuous inflow of the US dollar into US government bonds is exacerbating distortions in the global economy, keeping US interest rates at low levels. The article points out:

The scarcity of global dollars has created significant obstacles for US exporters, widening trade deficits and suppressing economic growth.

The author quoted Bank of England Governor Mark Carney's public speech in August this year, suggesting that a basket of digital currencies including the US dollar, euro, pound, and yen could reduce global dependence on the US dollar and serve as a new international reserve currency.

Interoperability of Blockchain is Key

The article emphasizes that the primary focus in stablecoin development should prioritize blockchain interoperability and frictionless transactions to achieve diversified global sources of liquidity and help balance trade flows.

The author points out that a single stablecoin, whether privately or central bank-issued, could potentially become a systemic leader and replicate the dominance of the US dollar through digital simulation.

In conclusion, the author mentions that there are already over 200 stablecoins operating on different blockchains and protocols, such as Tether, USDCoin, and Gemini Dollar. Facebook's Libra project, unlike other stablecoins, with its 2.7 billion active users, could become a global-scale payment system if officially launched.

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