ECB: Stablecoins Are not Practical as a Mode of Payment

A recent ECB report says stablecoins are not practical as a mode of payment and their current form isn't fit for use in the real economy. Although stablecoins are increasingly used to interlink various blockchain networks and play a critical role in offering liquidity to the DeFi ecosystem, but concluded that a lack of regulatory oversight added to the recent downfall of algorithmic stablecoins ecosystems such as Terra indicates the contagion effects such stablecoins could have on the financial system. "The largest stablecoins serve a critical function for crypto-asset markets’ liquidity, this could have wide-ranging implications for crypto-asset markets if there is a run-on or failure of one of the largest stablecoins."
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Stablecoins

Policy and Regulation

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