Monetary Policy & Stablecoins
Director Mu made it clear in his statement that banning cryptocurrency was critical to protect Chinese Monetary Policy.
Central banks control monetary policy by controlling what currency is created and how central bank lending is done.
Stablecoins pose a real and genuine threat to that independence.
Stablecoins are private coins and they are not controlled by central banks. But the value of these coins is pegged to fiat money.
This means actual currency supply is no longer controlled by the central banks. This loss of control has fuelled the race to bring into finance the CBDC.
“We live in an increasingly digitalised world where the way we make payments and use money is changing rapidly. The prospect of stablecoins as a means of payment and the emerging propositions of CBDC have generated a host of issues that central banks, governments, and society as a whole, need to carefully consider and address.” Governor BoE