Stablecoins, Distributed Ledger Technology, And The Future Of Global Finance: Navigating Regulatory Challenges And Opportunities

This policy brief explores the transformative potential of stablecoins, a category of crypto-assets crafted to mitigate price volatility, in streamlining financial transactions within Distributed Ledger Technology (DLT) platforms. It also evaluates their impact on global financial stability when embraced worldwide and used as international private money. Stablecoins, often pegged to fiat currencies like the US dollar, can offer enhanced liquidity, accessibility, and efficiency to financial transactions within DLT systems, but pose regulatory challenges due to their borderless nature and the current lack of harmonized rules across jurisdictions. This document contrasts stablecoins with eurodollars, emphasizing differences in regulatory oversight and legal frameworks. It calls for comprehensive data collection, harmonized regulatory frameworks, and risk management to ensure financial stability. Integrating stablecoins into existing regulatory systems is a possible institutional approach. Adopting these policy measures would create a more transparent and stable regulatory environment, enhancing the integration of stablecoins into the global financial system while mitigating associated risks.