Investigating the impact of global stablecoins

Payments are in a state of flux, and innovation is extensive. Domestic payments, in most instances, are increasingly convenient, instantaneous and available 24/7. Yet, despite significant improvements in recent years, current payment systems still have two major failings: lack of universal access to financial services for a large share of the world's population and inefficient cross-border retail payments. The private and public sectors must continue to explore innovative ways to make payments better, reduce inefficiencies and be more inclusive. Recently, a number of stablecoin initiatives have emerged, some sponsored by large technology or financial firms. Stablecoins, which have many of the features of earlier cryptocurrencies but seek to stabilise the price of the "coin" by linking its value to that of a pool of assets, have the potential to contribute to the development of more efficient global payment arrangements.

Against this backdrop, the Group of Seven presidency set up a working group on stablecoins, chaired by Benoît Cœuré (Chair of the CPMI), to examine the challenges, risks and benefits that global stablecoins may pose. The working group report finds that stablecoins, regardless of size, have implications ranging from anti-money laundering efforts across jurisdictions to operational resilience (including for cyber security), consumer/investor and data protection, and tax compliance. Global stablecoins may amplify those challenges and could also pose challenges to competition policy, financial stability, monetary policy and, in the extreme, the international monetary system.

This report lays out initial recommendations for both private sector stablecoin developers and public sector authorities to address the challenges and risks. Finally, the report suggests that authorities could develop road maps for improving the efficiency and lowering the cost of payments and financial services.