Stablecoins are an alternative digital currency that is pegged to a basket of traditional currencies and other assets. They are designed to address the shortcomings of first-generation cryptocurrencies in providing adequate monetary services. They represent a disruptor to the payment and finance industries in an era where offerings by technology companies, such as Facebook’s Libra project, are substituting the services of traditional banks. If not correctly understood, this trend could disrupt the dynamics of foreign exchange markets and the monetary policies used by central banks to monitor and influence the demand for fiat currencies. We provide recommendations for the Group of 20 (G20) and the International Monetary Fund (IMF) to assess the impact of and develop regulations for global stablecoins before their widescale circulation.
