Stablecoins do not pass the money test: research by central banks
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Stablecoins fail to perform the function of money, failing all three key tests - single value, elasticity, and security. This is the conclusion reached by central bank analysts in a new study of digital currencies published on the website of the Bank for International Settlements (BIS).

Study reveals critical problems with stablecoins in all aspects of money valuation.

Different stablecoins are traded at different rates, violating the principle of equal value. If stablecoins claim to be a digital dollar, then all digital dollars should have the same value, regardless of who issued them. And now users are forced to check which issuer's stablecoin they are receiving, which contradicts the basic principle of "no questions asked" characteristic of real money.

Secondly, unlike the banking system, stablecoins cannot quickly increase or decrease supply depending on the needs of the economy. Any additional issuance of stablecoins requires full prepayment from users.

Also, in the case of stablecoins, the principle of system security is violated: weak customer identification mechanisms make stablecoins attractive for money laundering and terrorist financing. Tracking and stopping illegal transactions is much more difficult than in the traditional banking system.

BIS experts also point to a number of associated risks from the spread of stablecoins, including a threat to monetary sovereignty. Since more than 99% of stablecoins are pegged to the US dollar, their use can lead to "hidden dollarization" of economies.

Central bank analysts emphasize that stablecoins can only play a supporting role in the financial system.

To fully function as money, they need fundamental changes in regulation and architecture.

"Society has a choice. The monetary system can be transformed into a next-generation system built on tried and tested principles. Or society can relearn the historical lessons about the limitations of untrustworthy money, at real societal cost, by taking a detour using private digital currencies that do not pass the triple test of unity, elasticity and integrity," the BIS writes.