- Towing the line of France’s Reserve Bank, the governor of Bank of England, said that they might have to fight against the international stablecoin standards established by the United States.
- The US stablecoins control nearly 90% of global stablecoin market.
- There is no second competitor to these stablecoins, with Switzerland (XCHF and ZCHF) being a distant second.
- Countries beware of US’s debt crisis, find it difficult to continue with a high amount of dollar-based stablecoins in their economy.
Bank of England Wants Independent Stablecoin Standards
The governor of the Bank of England, Andrew Bailey, said that global regulators had to step away from US control over global table coin standards. The statement comes after the Deputy Governor of the Bank of France said that the US dominance in the global stablecoin market has been alarming.
Currently, the United States dominates at least 90% of global stablecoin markets, with two cryptocurrencies, USDT and USDC, accounting for most of the market.
However, the lack of any other major international fiat-pegged stablecoin is more due to the lack of proper stablecoin regulations in that country rather than the dominance of the United States. Except for a few major countries, such as Switzerland (which has XCHF and ZCHF), there are virtually no other global stablecoins that can be used for international payments.
Although there have been several developments in digital currencies (CBDC) backed by the country’s central bank, no self-custody-compliant stablecoin has been launched by any other state or nation.
This leaves the market open to US dollar-backed stablecoins, which have been in the market since 2013. Tether’s USDT, previously known as real coin, was launched in 2013 on the Bitcoin blockchain.
Why Does Every Country Wants Their Own Stablecoins?
The elephant in the room currently is, why does every other country want its own stablecoin? And the answer is very simple, because the US Dollar could crash in the near future.
The US economy has a total debt of almost $40 trillion, which has been increasing at an alarming rate. If the US government is unable to service this debt with current tax revenue, it would be forced to print more dollars to settle it, which is expected to cause hyperinflation in the US dollar, ultimately crashing it. This has already happened once during the 1929 Great Depression in the US.
In this scenario, if there is a significant number of US dollar table coins present in the European economy or in the economies of individual countries, such as the U.K., this could seriously reduce their buying power. Since no country wants to take a hit to its foreign exchange reserves, it is likely to seek to reduce the number of dollars in its own economy.
The European Union has already taken a step in this regard, tapping several blockchains to create its own euro-based stablecoin.
Disclaimer: BFM Times acts as a source of information for knowledge purposes and does not claim to be a financial advisor. Kindly consult your financial advisor before investing.
