Central Bank Alliance: Stablecoins do not meet currency standards, making it difficult to become a pillar of the financial system

Recently, an international organization known as the "Central Bank Alliance" released its annual report on emerging financial technologies. The report pointed out that digital assets pegged to fiat currency failed to meet the three key criteria required to become a pillar of the monetary system: singularity, resilience, and integrity.

The report suggests that although stablecoins have advantages in certain aspects, such as programmability, a degree of privacy protection, and convenient user access, they may pose risks to the global financial system. These risks include undermining government monetary sovereignty and potentially facilitating illegal activities.

Specifically, stablecoins perform poorly in elasticity testing. Taking a well-known stablecoin as an example, its issuance requires holders to make full prepayments, and this "prepayment constraint" limits its flexibility. Furthermore, stablecoins fail to meet the "uniqueness" requirement of currency. Stablecoins issued by different institutions may adopt different standards, which cannot guarantee unified settlement guarantees.

The report's author points out: "Stablecoin holders need to label the issuer's name, which reminds people of the private banknotes during the free banking period in 19th century America. This often leads to different stablecoins trading at different exchange rates, undermining the unity that currency should have."

In promoting the integrity of the monetary system, stablecoins also have "significant flaws". Due to the lack of unified customer identity verification and anti-money laundering standards, stablecoins find it difficult to effectively prevent financial crimes.

Although the institution is cautious about stablecoins, it remains optimistic about the potential of tokenization technology. The report believes that tokenization platforms centered around Central Bank reserves, commercial bank currency, and government bonds are expected to become the foundation of the next-generation currency and financial system.

The release of this report had a certain impact on the market. The stock price of a major stablecoin issuer saw a significant drop of over 15% after the report was released. This trend stands in stark contrast to the company's previously strong performance.

Overall, although stablecoins play an important role in the cryptocurrency ecosystem and are increasingly popular in certain economic environments, this report indicates that international financial regulators remain cautious, believing that stablecoins do not yet meet the conditions to become mainstream currency.