Central Bank of Canada: Stablecoins could have an impact on the global economy

Analysts at the Central Bank of Canada called on regulators to oversee stablecoins more closely due to their risks to the international financial system.

Between the beginning of 2020 and mid-2022, the total capitalization of stablecoins increased 30 times, reaching $161 billion. Central bank researchers have recognized that stablecoins have a wide range of applications, especially when combined with smart contracts. In particular, stablecoins can increase the speed and efficiency of payments, becoming a serious competitor to traditional payment systems, especially in the digital economy.

However, even when pegged to fiat currencies, stablecoins cannot give users any guarantees, and therefore can pose significant risks to the stability of the financial system, Bank of Canada analysts are convinced.

They explained: now the three largest stablecoins account for 90% of all crypto assets pegged to fiat currencies. Thus, 1% of large investors hold more than 90% of the total volume of crypto assets pegged to fiat currencies. This concentration of stablecoins among their holders means that stable cryptocurrencies can greatly affect the global economy, according to experts from the Central Bank of Canada.

They argue that despite recommendations from international stablecoin oversight bodies, the current regulatory regime in Canada and abroad is not suited to this. Therefore, regulators should timely develop a comprehensive set of regulatory rules for stablecoins that will not only protect risk users, but also encourage the development of the cryptoasset sector.

Earlier, the Central Bank of Canada began to study the possibility of launching its own digital currency, but in April it announced that it would not rush to launch it.