Private Digital Euro Stablecoins
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.
Stablecoins: Implications for monetary policy,financial stability, market infrastructure and payments, and banking supervision in the euro area
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.
USD Coin Whitepaper
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 efficient 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.
Tether: Fiat currencies on the Bitcoin blockchain
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.
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
Digital Euro Association