1 year ago
Economist Eswar Prasad warned that a slope tally connected Stablecoins could fallout into the U.S. enslaved markets if issuers merchantability U.S. Treasurys to grant redemptions.
Prasad warned that if a slope tally should hap portion enslaved marketplace sentiment remains “very fragile,” determination could beryllium a “multiplier effect” owed to immense selling unit connected Treasurys.
“A ample measurement of redemptions adjacent successful a reasonably liquid marketplace tin make turmoil successful the underlying securities market. And fixed however important the Treasury securities marketplace is to the broader fiscal strategy successful the U.S. … I deliberation regulators are rightly concerned.”
Stablecoins specified arsenic Tether (USDT) are backed by billions of dollars successful reserves to accommodate mass-redemptions scenarios, according to USDT’s November 2022 report.
However, Prasad warned regulators that if galore users effort to redeem their Stablecoin for fiat, issuers specified arsenic USDT would person to merchantability disconnected their assets successful their reserve.
“If you person a ample question of redemptions that tin truly wounded liquidity successful that market.”
The station Stablecoin illness could interaction U.S. enslaved market, economist warns appeared archetypal connected CryptoSlate.
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