E44 - Financial Markets and the Macroeconomy - Bank of Canada
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Bank of Canada RSS Feedsen2024-03-29T11:24:46+00:00Stablecoins and Their Risks to Financial Stability
https://www.bankofcanada.ca/2022/11/staff-discussion-paper-2022-20/
What risks could stablecoins pose to the financial system? We argue that the stabilization mechanisms of stablecoins give rise to the risk of confidence runs, which can propagate to broader cryptoasset markets and the traditional financial sector. We also argue that stablecoins can contribute to financial stability risks by facilitating the buildup of leverage and liquidity mismatch in decentralized finance. Such risks cannot be addressed by ensuring the price stability of stablecoins alone. Finally, we explore the potential implications of stablecoins for the current system of bank-intermediated credit and for monetary policy.2022-11-28T14:39:47+00:00frStablecoins and Their Risks to Financial Stability2022-11-28Digital currencies and fintechFinancial institutionsFinancial marketsFinancial stabilityFinancial system regulation and policiesStaff Discussion Paper 2022-20https://www.bankofcanada.ca/wp-content/uploads/2022/11/sdp2022-20.pdfStaff Discussion Paper 2022-20Cameron MacDonaldLaura ZhaoNovember 2022EE4E42E44E5E58GG2G23