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Moody’s Analysts Highlight the Main Problem of the Stablecoin Market
According to Moody’s, the excessive spread of virtual coins pegged to fiat assets could weaken central banks’ control over lending rates and the stability of national currency exchange rates.
In the medium term, banking institutions may face a decline in overall deposit volumes if private depositors massively shift their savings into stablecoins, the rating agency’s representatives explained.
“The absence of a comprehensive regulatory framework increases markets’ exposure to financial instability, especially in jurisdictions with rapid growth and a high level of digital currency penetration,” Moody’s experts noted.
They added that the expansion of stablecoin use, despite the perceived safety of these stable tokens, carries risks. Weak oversight may trigger capital flight, meaning that governments, in the event of a collapse of the stablecoin-to-fiat peg, would be forced to take costly measures, Moody’s specialists concluded.
Earlier, Chiara Scotti, Deputy Governor of the Bank of Italy, called on European regulators to adopt clear and uniform rules for international stablecoins.
See also: "Bitcoin Price Today: Recovers to $112K with Whale Support"
