A study by the European Central Bank (ECB) states that the launch of stablecoins by large companies can help to better understand the sector. “The involvement of large technology and consumer companies with broad user bases (such as Libra) provides a natural platform for a more meaningful understanding about the stablecoins”, the text says. Libra is the stablecoin that Facebook wants to launch.
Stablecoins are cryptocurrencies that have a ballast. This can be a national currency, such as the dollar, a commodity or even a digital asset. And it is this ballast that gives stability to the currency price. Therefore, the scenario is quite different from that of common digital currencies, known for their very volatile price.
The ECB study also points out that most stablecoins in use do not have “the most prominent features of cryptoassets”. Among them, the ECB mentions as an example the absence of the possibility of making financial complaints, or charging liability against an identifiable entity. This is because, given the operation of a stablecoin, it requires that there be an issuer responsible for keeping the guarantees of these currencies.
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ECB defends international coordination to regulate stablecoins
The Eurosystem – composed of the ECB and national central banks of the euro zone – is revising the rules for means of payment. The goal is to broaden “its scope to include any electronic payment instruments that allow end users to send and receive amounts”. And that includes “those based on stablecoins”, the study says.
Furthermore, according to the analysis, the Single Supervisory Mechanism (SSM) can be based on the existing approach to supervision. In addition, it may require banks to take appropriate risk management rules to deal with possible reflections of the use of stablecoins.
But it is not enough just for the ECB to act. The study says it is necessary to complement the ECB’s efforts with “appropriate, internationally coordinated regulation”, besides having cooperative supervision and monitoring. This collaboration is important because of the “global nature” of stablecoins operations, says the ECB. Therefore, the ECB cannot develop the regulatory approach in isolation, but with information on the efforts made by other bodies.
Finally, the study calls for the change of the name stablecoins. For the ECB, the term may be confusing, as there is some fluctuation in prices. Although it is worth remembering that this is a small variation.
