Stablecoins: potential dangers and countermeasures

On December 28, "The 1st Digital Finance Frontier Conference in 2021" was held online. The conference was organized by the Tsinghua SEM Digital Financial Assets Research Center and chaired by Professor Luo Mei, director of the center.Li Lihui, former governor of corporate finance and consultant for Tsinghua SEM Digital Financial Research Center, delivered a keynote address titled "Stablecoins: Potential Dangers and Protection".This sentence is designed based on the content of the statement.

Digital finance has grown rapidly in recent years and digital benefits are a key part of it. This form of e-money technology is called digital currency and can be widely distributed across legal and illegal digital accounts.Illegal encrypted digital funds can be divided into two categories. One is called virtual currency.They often have no real estate support and market prices fluctuate.Another category is that of stability coins, which we are talking about today.Stablecoins claim to be pegged to a sovereign currency to recover financial assets and maintain price stability.

Stable markets have developed rapidly and are consistent, and according to data from Coingecko in July this year, the overall value of the global fixed income market exceeded $110 billion in July. The top three coins are 90% stable, including USDT at $64 billion, USDC at $26 billion, and BinanceUSD at $11 billion. Currently, countries around the world lack clear legal standards for stablecoins, good financial governance, and reliable external audits.

The largest financial industry is that of the United States,First, let's focus on the strength of US dollar stability.The first is the recently announced “Stablecoin Report” by the US Presidential Task Force on Financial Services., "card" defines a fixed currency as a digital asset designed to maintain a fixed value against a national currency or other asset. Stablecoin and its companies manage the risks associated with trading digital assets, which can lead to financial risk.

In response to this situation, "Declaration" said that certain activities of coin stability mechanisms should be defined as the importance of removal and resolution as soon as possible and integrated into existing management processes. In addition, we manage many of the risks associated with fixed coins and related activities by limiting the activities of custodians and sources of fixed income to follow industry associations by applying US laws as soon as possible.

The second dynamic was when Facebook launched Diem, an alternative to Libra. This changed from focusing on a basket of currencies past one pound against the US dollar.The Diem organization generates more than 2 billion global users and, if approved, has the potential to quickly become a global super-sovereign currency, access to working life for ordinary people and competition for financial services are still there. A multinational banking financial unicorn can have a major impact on existing finance and finances.

Given that DM's primary dependency remains the US dollar, this could be a way for the US to continue leading the US dollar's hegemony in the digital economy. This will affect the Korean yuan's penetration into the international market and affect the yuan's internationalization process. In his remarks on June 29, the Fed Vice Chairman said that private companies should support the issuance of stablecoins with appropriate standards. The role of the dollar in international trade.

Stablecoin supporters believe that stablecoins can be widely used as a means of payment by households and businesses, and if well-designed and well-managed, stablecoins can be promoted quickly, more, more profitable and more payment options. But at the same time, you should be aware of the dangers of this new financial tool.

Our country is a strong economic power, and a high level of awareness of trade and financial openness, including the opening up of investment capital, has become a national policy. Even though our country prohibits virtual currency transactions, including stablecoins, stablecoins based on industry standards and decentralized procedures can still affect business funding. Focus on the future to promote the importance of competition in digital finance, actively respond to the impact of financial decisions, protect the interests of investors, manage trade security, and improve the stability of the financial system.

Especially with our opinion.

First, to become the global renminbi digital leader in digital currency banking.We strive to improve the technological process and the development of application scenarios, and hold the leading role of our national financial institution in the global digital experience. The establishment of the world leaders in digital currency banking will not only facilitate financial accounting to maximize the value of virtual currency of financial and financial institutions, but also promote the multiplication and harmony of the global financial and monetary system. In the age of digital commerce.

Second, it creates financial security issues for the distribution of assets.

We develop new financial tools in this model to circumvent financial barriers, develop technological tools and strategic plans and create digital finance. security fence.

Third, establish a regulatory framework for access to integrated companies.

Technology Technology is changing the way financial services are designed, progressively developing new models of financial integration, interconnection and interconnection, and new business models are needed for managing new builds. Digital financial management should be jointly developed and shared by financial institutions that include all financial institutions, including companies involved in the financial sector. the data source.