Stablecoins, digital assets designed to maintain a stable value relative to a national currency or other reference assets, gained a moderately favorable mention in a speech by Federal reserve Governor Christopher Waller this week.
Waller disagreed with a new report from the President’s Group on Financial Markets (PWG)which urges congress to limit the issuance of “payment stablecoins” to banks and other insured depository institutions.
“The PWG report lays out one path to responsible innovation, and I applaud that effort,” said Waller via webcast at the 2021 Financial Stability Conference. “However, I also believe there may be others that better promote innovation and competition while still protecting consumers and addressing risks to financial stability.”
According to Waller stable coins offer markets various potential benefits, such as being a stable private asset in digital markets, allowing for more efficient cross-border payments as well as being a source of healthy competition for existing payment systems.
“I disagree with the notion that stablecoin issuance can or should only be conducted by banks, simply because of the nature of the liability,” said Waller. “I understand the attraction of forcing a new product into an old, familiar structure. But that approach and mindset would eliminate a key benefit of a stablecoin arrangement—that it serves as a viable competitor to banking organizations in their role as payment providers.”