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Banning stablecoin remuneration will not protect banks’ deposits
Stablecoins are here to stay and regulators, far from burying their heads in the sand, are taking on the new challenge they present. Rules on how stablecoin issuers conduct their business are a necessary component of a stable financial ecosystem in which these instruments play a role. But what is driving the formation of these rules? When seeking to protect financial stability from the new threats stablecoins present, there are two scenarios that concern central banks. First, rapid redemptions of stablecoins would require the issuer to quickly dispose of reserve assets, causing a slump in the price of these assets ... (full story)