Stablecoins are crypto assets that maintain a (relatively) constant price due to a stabilization mechanism and are therefore not subject to high volatility. Stability is ensured, e.g., by holding reserves in fiat currencies, government bonds, or other assets. Euro stablecoins hold euros as the underlying reserve. Most popular stablecoins are backed by US dollars, such as Tether (USDT), USDC, and - in the future - the Diem Dollar.
See German publications below.
This paper summarises the outcome of an analysis of stablecoins undertaken by the ECB Crypto-Assets Task Force. At the time of writing, the stablecoin debate lacks a common taxonomy and unambiguous terminology. This paper applies a definition that distinguishes stablecoins from existing forms of currencies – regardless of the technology used – and characterises stablecoin arrangements based on the functions they fulfil. This approach emphasises the role of technology-neutral regulation in preventing arbitrage, as well as comprehensive Eurosystem oversight, irrespective of stablecoins’ regulatory status. Against this background, this paper assesses stablecoins’ implications for the euro area based on three scenarios for the uptake of stablecoins: (i) as a crypto-assets accessory function; (ii) as a new payment method; and (iii) as an alternative store of value. While the first scenario is merely the continuation of the current state of the market and, thus far, has not posed concerns for the financial sector and/or central bank tasks, stablecoins of the type envisaged in the second scenario may reach a scale such that financial stability risks can become material, and the safety and efficiency of the payment system may be affected. The third scenario is both the least plausible and the most relevant from a monetary policy perspective. The paper concludes that the Eurosystem relies on appropriate regulation, oversight, and supervision to manage the implications of stablecoins (and the risks that stem from them) on its mandate and tasks under plausible scenarios. The Eurosystem continues monitoring the evolution of the stablecoin market and stands ready to respond to rapid changes in all possible scenarios.
The open internet -- a global, distributed network of computers that share common open software protocols -- has enabled billions of humans to connect and share information instantly, securely and with zero consumer cost. The implications for the world have been profound, and are still unfolding.The invention of cryptographic assets and blockchain-based computing and data sharing have ushered in the next major era of the open internet.
Just as HTTPS, SMTP and SIP allowed for free information sharing and communications, crypto assets and blockchain technology will allow humans to exchange value and transact with one another in the same way: instantly, globally, securely and at low cost. An open internet of value exchange can transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more ecient and inclusive global marketplace that connects every person on the planet. The future of the global economy is open, shared, inclusive, far more evenly distributed, and powerful not only for a few chosen gatekeepers, but for all who will connect.
A digital token backed by fiat currency provides individuals and organizations with a robust and decentralized method of exchanging value while using a familiar accounting unit. The innovation of blockchains is an auditable and cryptographically secured global ledger. Assetbacked token issuers and other market participants can take advantage of blockchain technology, along with embedded consensus systems, to transact in familiar, less volatile currencies and assets. In order to maintain accountability and to ensure stability in exchange price, we propose a method to maintain a onetoone reserve ratio between a cryptocurrency token, called tethers, and its associated realworld asset, fiat currency. This method uses the Bitcoin blockchain, Proof of Reserves, and other audit methods to prove that issued tokens are fully backed and reserved at all times.
Cryptocurrencies have several advantages to fiat currencies as a means of payment. They enable transfer of value that is much faster than a bank wire, at lower cost (especially for international payments), in a publicly auditable and secure manner, using a technology that is globally accessible so long as you have a smartphone. Further, cryptocurrencies can be programmed; allowing financial contracts, escrow, and insurance, all without intermediaries. However, at the moment, there are several barriers to the mainstream adoption of cryptocurrencies as a means of payment. First, due to deterministic supply rules and unpredictable coin demand, successful coins experience deflationary price instability. As a result, users rationally prefer to use them as a store of value rather than a medium of exchange. Second, even when people do wish to use price-volatile cryptocurrencies as a means of payment, they need to generate a private/public key pair to receive a payment, and enter in somebody’s public key in order to send a payment. While these may seem small obstacles, experience has shown that small differences in user experience lead to large differences in usage outcomes.
On April 16 2020, the Libra Association — a consortium including 22 companies like Facebook/Calibra, Spotify and Uber — has announced its version 2.0 of the Libra project: Libra was initiated by Facebook and revealed in summer 2019 (v1.0). After tremendous criticism by regulators after the announcement of v1.0, the Libra Association clearly takes a step towards regulators with the recent announcement, changes its concept (v2.0), and complies with many demands from regulators and central banks. It is therefore reasonable to argue that, eventually, the Libra platform might be launched later this year. Admittedly, Libra has lost some important consortium members such as Mastercard, Visa, PayPal and Vodafone. In this article, we answer the following question: What are the key aspects of the new concept “Libra 2.0” and what are its implications)?
The announcement of the Libra Association to issue a private global currency has triggered a heated debate about the concomitant advantages and risks. Proponents expect Libra to unfetter money from its “governmental chains” and liberalize and cheapen monetary transactions around the globe. Opponents argue that a private currency imposes unforeseeable risks for both individuals and the whole financial system. Furthermore, Libra could hamper monetary policies of national central banks. This paper contributes to the debate in two ways. First, we offer a comprehensive overview of the concept of Libra and its possible benefits and downsies to analyze its market potential. Second, we discuss potential implications that a private currency as Libra poses for monetary policy and financial regulation.
A discussion on the concept, impact and role of CBDCs such as Libra on the financial system.
Diem, früher bekannt als Libra bezeichnet ein von Facebook initiiertes Projekt, das im Juni 2019 angekündigt und dessen Konzept im April 2020 angepasst wurde. Diem gehört zu der Klasse der Stablecoins und ist 1:1 mit Fiat-Währungen, wie dem Euro und dem US-Dollar, und kurzfristigen Staatsanleihen gedeckt. Das Projekt zeichnet sich durch seinen hybriden Charakter aus, da Diem neben der Bereitstellung eines globalen Zahlungssystems ein eigenes Zahlungsmittel (“Diem Coin”) zur Verfügung stellt, um die Effizienz im grenzüberschreitenden Zahlungsverkehr zu tätigen.
Stablecoins bezeichnen Kryptowerte, die durch einen implementierten Stabilisierungsmechanismus, wie z.B. das Halten von Reserven in Fiat-Währungen, einen konstanten Preis erhalten und keiner großen Volatilität ausgesetzt sind.
Am 16. April hat die Libra Association — ein Konsortium aus 22 Unternehmen, darunter Facebook/Calibra, Spotify und Uber — die Version 2.0 des Libra-Projekts angekündigt: Libra wurde von Facebook initiiert und das Grundkonzept wurde im Sommer 2019 veröffentlicht (v1.0). Nach der Kritik von Politikern und Regulatoren nach der Ankündigung von v1.0 geht die Libra Association nun eindeutig einen Schritt auf Regulatoren zu, ändert das Libra-Konzept (v2.0) und kommt vielen Forderungen von Regulierungsbehörden und Zentralbanken nach. Somit könnte die Libra-Plattform tatsächlich bereits in diesem Jahr Realität werden. Allerdings sei angemerkt, dass die Libra Association einige wichtige Konsortiumsmitglieder wie Mastercard, Visa, PayPal und Vodafone verloren hat. In diesem Beitrag adressieren wir die folgenden Fragen: Was sind die Schlüsselaspekte und Hauptunterschiede des neuen Konzepts “Libra 2.0” und was sind deren Auswirkungen?
Im Rahmen des Interviews diskutieren die DEA Gründungsmitglieder Jonas Groß, Projektmanager am Frankfurt School Blockchain Center und wissenschaftlicher Mitarbeiter an der Universität Bayreuth, und Alexander Bechtel, wissenschaftlicher Mitarbeiter an der Universität St. Gallen, über das Projekt „Libra“, das im Juni 2019 angekündigt wurde und wozu im April 2020 ein Update veröffentlicht wurde. Im Interview sprechen die beiden vor allem über die zuletzt angekündigten Änderungen des Libra Projekts, den Use Case hinter Libra und die Implikationen der angekündigten Strategieänderung.
Die Ankündigung der Libra Association, mit Libra eine private globale Währung zu emittieren, hat eine heftige Debatte über die damit verbundenen Chancen und Risiken ausgelöst. Befürworter erwarten, dass Libra das Geldsystem von seinen „staatlichen Fesseln“ befreien und den Zahlungsverkehr weltweit liberalisieren und verbilligen kann. Gegner argumentieren, dass eine private Währung erhebliche Risiken für den einzelnen Nutzer und das gesamte Finanzsystem mit sich bringt. Darüber hinaus könne Libra die Effizienz der nationalen Geldpolitiken einschränken. Dieser Beitrag erläutert das Konzept von Libra und leitet aus deren Vor- und Nachteilen das Marktpotenzial von Libra ab. Zudem werden Implikationen für die Geldpolitik und die Finanzmarktregulierung beleuchtet.
Seit der Einführung von Bitcoin 2008 und vieler anderer Kryptowährungen ist eine neue Welle innovativer Zahlungsprojekte im Gange, darunter Innovationen wie Libra – als supranationaler Stablecoin konzipiert – und digitale Zentralbankwährungen. Diese privaten und öffentlichen Projekte sind durch verschiedene Wechselbeziehungen miteinander verbunden. Bitcoin hat sich bislang nicht zu einem weit verbreiteten Zahlungsmittel entwickelt, unter anderem wegen der erheblichen Preisvolatilität. Im Gegensatz dazu soll Libra ein eher konventionelles Zahlungsmittel mit engen Beziehungen zum bestehenden Bankensektor werden, was viele Fragen zur Geld- und Finanzstabilität aufwirft. Digitale Zentralbankwährungen könnten als Reaktion des öffentlichen Sektors auf diese privaten Projekte angesehen werden, um die vorherrschende Rolle der Zentralbanken im Währungssystem der Zukunft zu sichern.
"Especially as soon as stablecoins will be regulated, they provide an attractive option for the (private sector) digital euro. Stablecoins will be available as means of payment for programmable payments and could, in the future, also be issued by commercial banks."
Jonas Gross Digital Euro Association
The Digital Euro Association (DEA) is a think tank specializing in central bank digital currencies (CBDCs), stablecoins, crypto assets, and other forms of digital money. In particular, we focus on the digital euro. Our mission is to contribute to the public and political discourse through research, education, and by providing a platform and community for policy-makers, technologists, and economists to discuss digital money-related topics. We are committed to independence and excellence, aiming to set the agenda and to shape policy by encouraging new ideas and forward-thinking in the field of digital money. We target new and innovative topics such as the digital euro and Stablecoins, but also “classical” crypto assets such as Bitcoin and Ether.