Posted 2 years ago | by Ben Armstrong
Federal Reserve Lashes Out at Stablecoins in Recent Report
In a report released by the Federal Reserve, the US Central Bank, stablecoins were cited as a risk to the stability of the global financial system. In the FED's 'Financial Stability Report' the stablecoin market, and how they are structured, were talked about in less-than-favorable terms.
According to the report:
“In an extreme scenario, holders may be unable to (liquidate), with potentially severe consequences for domestic or international economic activity, asset prices, or financial stability...Stablecoin initiatives that are built on existing large and cross-border customer networks, such as Facebook’s Libra, have the potential to rapidly achieve widespread adoption...”
The underlying idea isn't difficult to understand. The FED is worried about the level of crypto adoption, and it realizes that it, as well as the other global regulators, are unable to regulate the markets.
The Dying Fiat
One of the only tools that the established banking system had to use as a form of regulation in the crypto markets was access to the money-center fiat banks. As the wild crypto bull of 2017 was in full swing, major banks began to limit the use of their products, like credit cards, to buy tokens.
The problem with a stablecoin is that unlike regular tokens, they don't move around in value, and are much more palatable from the perspective of a consumer that just wants to use their tokens like digital cash.
The FED knows that most people don't understand how the fist currency system works, they just want to buy a new sweater for their cat from Amazon.
Puss is COLD!
Of course, the FED, as a member of the global money cartel, wants to be able to regulate the issuance of stablecoins, and maintain its grip on the issuance of currency.
From the report released last Friday:
“As the Group of Seven has noted, ‘no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks outlined [in this report] are adequately addressed, through appropriate designs and by adhering to regulation that is clear and proportionate to the risks.’”
Nowhere to Run
The real problem facing the global banking syndicate isn't one that can be easily resolved. In truth, the monetary that was born out of the Second World War can't go any further, and the end-game isn't one that puts the power centers in a leading role.
As it stands today. There is more than $250 trillion USD worth of debt globally, which is more or less three times the value of global GDP. If the FED is worried about the state of the stablecoin market, the sheer amount of (growing) global debt may be keeping them all up for weeks at a time.
Fiat currency has value for the simple reason that the masses believe that they will be able to trade it for something they need, when the time comes. With every dollar of GDP already spent three times over, one wonders if the fiat currency game has already ended, and the next world currency is in the process of being elected.