Rhee Chang-yong cautioned that the widespread use and frequent fluctuations of stablecoins might undermine the efficacy of central bank monetary policies.
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Bank of Korea Governor Rhee Chang-yong expressed concerns about stablecoins like tether (USDT) and USD Coin (USDC), stating that despite their name, they often lack stability. This was reported by Yonhap News on Friday.
Rhee emphasized the need for central banks to contemplate implementing central bank digital currencies (CBDC), either for retail or wholesale use, during the Digital Money: Navigating a Changing Financial Landscape conference. He warned that their extensive adoption might lessen the influence of central bank money, impacting the efficiency of monetary policies.
This week, stablecoin stability, the ability of these cryptocurrencies to maintain their peg to fiat currencies like the dollar or euro, came under the microscope. S&P’s newly launched rating system delivered a reality check for Tether, the largest stablecoin by market value, placing it only one step above the lowest rank. None of the eight assessed coins achieved the coveted top score.
According to Yonhap, Rhee mentioned the Bank of Korea’s efforts in developing a wholesale CBDC pilot and investigating its application in tokenizing real-world assets. The bank previously announced intentions to conduct a retail pilot program involving 100,000 individuals next year.
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