Toomey, on the other hand, highlighted an important and lingering question, can stablecoins and a Federal Reserve digital dollar coexist? Why do you need stablecoins if all Americans have retail accounts with the Federal Reserve, as Toomey proposed in what may have been an overblown Scenario, and the Fed becomes the retail lender to America? Or, for that matter, typical retail banks? Indeed, the Fed identified many possible hazards connected with a digital currency in a discussion paper released on January 20, including the possibility that a CBDC may effectively replace commercial bank money. The purpose of that document was to gather public feedback, but the Fed has stated that, despite the efforts of other countries like China, it has no interest in rushing out a digital currency.
Not everyone believed the two could coexist. The case for privately authorized stablecoins might well be undercut by a broadly and easily available digital dollar, Eswar Prasad, professor of economics at Cornell University clarified to some news website, adding that stablecoins released by significant corporations could still have a foothold, specifically within those corporations’ own commercial or financial ecosystems.
Different Use Cases For Both
Others imagined different and independent use cases for stablecoins and central bank digital currencies, or CBDCS, a category that would include a future digital dollar from the United States. Darrell Duffie, Adams distinguished professor of management and professor of finance at Stanford University’s Graduate School of Business explained to some news website. There are undoubtedly some distinct use cases for each.
In its architecture and purpose, stablecoins are different from most CBDCS, Matt Higginson, a McKinsey partner who oversees the firm’s worldwide blockchain and digital assets projects, explained. CBDCs are usually focused on increasing financial inclusion, lowering the cost of ash, and recording financial transactions to some extent. Stablecoins, on the other hand, are dollar-pegged tokenized cash targeted at increasing payment speed and efficiency. Their premises are really pretty different, Higginson explained, so there’s no reason they shouldn’t coexist. According to Jonas Gross, chairman of the Digital Euro Association, a digital currency isn’t primarily about technology or efficiency.