While cryptocurrency prices aren’t doing so well right now, the debate over crypto legislation is heating up. In recent days, prominent financial heavyweights have weighed in on the market, particularly the stablecoin asset class. As more countries choose to regulate cryptocurrency, there has been discussion regarding whether CBDCs are a worthwhile endeavor. According to what I’ve heard, some people are enthusiastic about the notion.
Of all, with the recent rampant volatility in the stablecoin business, it’s difficult to argue against CBDCs. Terra’s $1-pegged stablecoin was thrust into the limelight earlier this month when it crashed and burned to today’s 5 cent price. Stablecoins had previously been regarded one of the safest investments in DeFi.
Many people have abandoned cryptocurrency as a result of the collapse. People are speaking out in favor of stablecoins issued by centralized, controlled corporations, which makes sense. In a manner that other stablecoin initiatives cannot, these institutions can assure that their currencies are collateralized and protected from fluctuation.
As Finance Experts and Policymakers Continue to Discuss Stablecoins, Consider CBDCs.
With hundreds of influential business executives in Davos, Switzerland for the World Economic Forum’s 2022 conference, financial policy has been a hot topic this week. Crypto and stablecoins are being discussed at Davos and throughout the world.
Christine Lagarde, the head of the European Central Bank, has sparked the greatest outrage among crypto enthusiasts this week. Lagarde has said that digital assets are useless and “based on nothing.” She’s now doubling back, saying that although her son invests in the industry, his holdings have encouraged her to stay away from it totally. Despite her pessimism, Lagarde has expressed support for a Euro CBDC. “I will promise it the day we get a central bank digital currency, any digital euro,” she declared. CBDCs, according to Lagarde, are “vastly different” from other cryptos.
Meanwhile, Federal Reserve Vice Chair Lael Brainard has spoken out in favor of CBDCs this week, sounding upbeat. On Thursday morning, Brainard spoke before the House Financial Services Committee regarding the possibility of a digital currency in the United States. CBDCs, she says, may “exist alongside and complement stablecoins and commercial bank money.”
This comes at a time when many other countries are aggressively pursuing their own CBDC initiatives. The Brazilian central bank is teaming with Stellar Partners to establish its own CBDC, while the ECB and Fed continue to speculate about their own stablecoin endeavors. Norway is also dabbling in the field, testing its own digital currency on an Ethereum (ETH-USD) layer-2 network.