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Digital currencies issued by central banks, or CBDCs, are under discussion almost everywhere globally (more than 80% of nations). They are not meant to replace fiat money but rather be an alternative to simplify transactions and even democratize access to financial systems. Do stablecoins, which are digital currencies with some backing but decentralized, have a future with their implementation?

 This was the subject of a wide-ranging debate on regulation and prospects for private stablecoins, held by the Crypto Valley Association on June 22. For the CEO of Transfero, Thiago Cesar, who participated in the roundtable discussion, one thing does not invalidate the other. According to him, on the contrary: when starting to use a CBDC, the user feels safer to enter the crypto market. “It’s a form of access because it will allow people to understand how technology works and start to rely more on digitization, which facilitates their entry into the crypto asset universe”, he said.

Stablecoins solve problems of traditional currencies

Furthermore, in Cesar’s assessment, stablecoins emerged to solve some problems inherent to fiat money. “When the stablecoin is pegged to a hard currency, as in the case of the Theter (USDT), whose unit is worth one US dollar, the great benefit is the simplification of international transactions, which gain agility and have reduced costs”, he explained.

On the other hand, regarding stablecoins created in emerging countries, such as Brazil (BRZ case), there are still some extra advantages. “In Brazil, it is not always simple to buy another currency; usually, the conversion is made from the real to the dollar, and then from the dollar to the currency in question. With this, the user bears all the rates arising from the exchange rate”, he said. In addition, according to Cesar, those who need to make an international remittance of values gain agility. “If the individual in Brazil needs to make a payment today in China, for example, the transaction is simpler using a crypto asset. By traditional means, the transaction time is longer, which can even compromise the negotiation, in addition to the rates being high”, he said.

CBDCs and stablecoins can coexist

Cesar pointed out that Brazil should soon implement the digital real, but that he does not consider this to be a problem for the BRZ. “It is just another means of payment or transfer, which will give greater power of choice to the consumer. It will be possible to pay with conventional money (banknotes), through electronic transfer, with CBDC or stablecoin. This already happens today, when the person chooses between paying with a credit card, debit card or cash”, he exemplified.

His view is shared by the representative of the board of directors of the National Bank of Switzerland, Thomas Moser. According to him, “privately issued currencies and those issued by the state have always coexisted”. Moser also recalled that CBDCs are nothing more than virtual versions of traditional money.

What’s the future of money?

 During the event, regulators and central bank representatives from Singapore, Switzerland, Australia, and the European Union discussed the plans for CBDC adoption and the outlook for stablecoins in this scenario, with some private companies issuing digital currencies.

In Europe, several nations have already taken their first steps. France, for example, has just tested the use of a CBDC for securities settlement with the launch of a digital currency on a public blockchain. The tests should still last some time and, it is worth remembering, the country does not issue its currency because it uses the euro.

Either way, Europe is progressing and advancing faster than the United States, where the digital dollar is still in the study phase. On the other hand, China has the most advanced CBDC project in the world, with the digital yuan.

Besides Thiago, from Transfero, who answers for BRZ, also participating were Huw Rogers, from Paxus, the issuer of PAX (USD), and Gustav Arentoft, from MakerDAO, from DAI (USD). Other panelists were CoreLedger CEO Johannes Schweifer, and Jason Chlipala, the COO of blockchain Stellar Foundation, which launched USD Coin (USDC). Schweifer strongly criticized algorithmic stablecoins, which are not pegged to fiat currencies or other physical assets such as precious metals or commodities, but whose supply is defined by algorithms and smart contracts.