Government report details that stablecoins could pose a risk to the economy
|- Governing body in the United States, FSOC released a report, expressing concerns around stablecoins.
- The report highlighted potential threats to the economy from the adoption of coins such as Libra.
The Financial Stability Oversight Council distributed a new report this week, which covered ground on a range of risks to the U.S. financial system and economy.
A section of the report detailed the threats that are observed from an increase in stablecoins, such as Facebook’s proposed Libra.
As per the report, the FSOC said:
If a stablecoin became widely adopted as a means of payment or store of value, disruptions to the stablecoin system could affect the financial system and the wider economy, warranting greater regulatory scrutiny. A decline in the value of certain digital assets could result in the transmission of risk to the financial sector through financial institution exposures, risks to the payment system, wealth effects, and confidence effects. Consumers, investors, and businesses could also face losses if the market price of such assets is unstable. Risks to the payment system, if not properly managed, could present financial stability risks, given the importance of a well-functioning payments system in facilitating commercial activities.
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