Bitcoin Forum

 Introducing stablecoins as a major currency in countries experiencing economic instability is an interesting idea that has both potential benefits and challenges. I don't really know if this would be a good idea but I think this could help many countries that are facing a real currency depreciation.
This are some of the benefits I think I could bring

Stability: Stablecoins are designed to be less volatile than traditional cryptocurrencies like Bitcoin or Ethereum. This stability could provide a more reliable medium of exchange and store of value, especially in economies with rapidly depreciating currencies.

Inflation Control: Stablecoins are typically pegged to a stable asset like a fiat currency or commodity, which could help countries better control inflation and manage their monetary policy especially in African countries.

Financial Inclusion: Stablecoins could increase financial inclusion by providing access to digital financial services for individuals who are unbanked or underbanked.

Reduced Transaction Costs: Digital transactions using stablecoins can potentially be more efficient and cost-effective compared to traditional payment systems, especially for cross-border transactions.

Please share your insights on this topic.

First, op you should consider moving your post to the economy board. It has nothing to do with the beginners and help section.

stablecoins unlike Bitcoin usually stay close in value to a currency like the US Dollar. This means they don't tend to become much more valuable over time, so people may not make big profits like they can with Bitcoin. governments can have rules for stablecoins, which might affect how well they can help when an economy is struggling.
Stablecoins can make things more stable and easy to buy and sell, but they don't work the same way as Bitcoin for making profits. They're better for being a safe and reliable digital way to trade things, rather than for making an economy grow a lot or help save it from inflation.To really help a falling economy, it's important to think about stablecoins as just one part of a bigger plan by the government, but I don't see how this will help save a falling economy.

If it's backed by a rapidly depreciating fiat currency then how is it going to control inflation?

Stable coin can not save the depreciating economy. Even if it is Unted States that you are talking about, stable coin can not help. What they will help, fiat is not among. What that helps economy is how productive they are in a nation.

If someone's life is stable, did you know what that means?

Nothing in life is stable.

Stable coins reduce in value from time to time.

Stable coins and fiat are devaluating assets.

Fiat like the USD are the inflation themselves. Inflation can not be used to control inflation.

Do you realize that CBDC from a country is just a dummy of their actual fiat so what difference it is going to bring to its users?

Bitcoin ain't save the depreciating economy too but at least its different from something issued by government and there is no central authority to control it either. If a government wants to save them from inflation then they need to make changes in their policies and finding the right thing that will generate more revenue for the government.

Your topic just doesn't make any sense, how can a country introduce stable coins that is backed by another fiat currency and issued by a centralized organization as their main currency. Stable coins aren't automatically stable as the name denotes, there has to be enough reserves to cover whatever is issued, and how stable the coin is depends on the value of the currency it is backed by.

Having said that, the closest thing to what you are saying is CBDC's, and it doesn't help to save a depreciating economy because it has the same value as the fiat currency of the issuing country, just that it is digitally issued. Issuing or printing new currencies doesn't help save a country from inflation, instead it makes things a whole lot worse, the problem isn't the money used per se, but the policies made by the country.

Economy and stablecoins are two different things, from all sides, if you ask me whether (USDT), USD (USDC), and USD (BUSD, can the world economy be stable, the answer is no.

As far as I know the crypto market and the real market are different things, not everyone uses stablecoins, only certain ones, as well as the crypto market, not all of us use them, so how can stablecoins stabilize the world economy, we are aware that stablecoins only exist in the crypto market, whereas to stabilize the economy there are many things that must be done, that can happen in real activities, not in internet activities.

Things that need to be done to stabilize the economy are:

stablecoins have no impact and influence in achieving the Economic Stability milestone.

What difference does it make to have a stablecoin to adopt that coin you must have 1:1 real currency to back it up which becomes difficult for one. But overall to some extent, I liked your idea and also it's not something new about you that came up. But still, I liked your enthusiasm and keep coming up with such ideas because at one point you might come up with something unique and good one.

And many countries might even not allow you to use their currency as a reserve for some stable coin and what if the world all at once makes collude to not adopt your stablecoin anymore? But still, the stable coin if made the things and products we are buying let's say for 290 PKR = 1 US dollar here. And if you wanted to buy something before the implementation of this idea was of 100Pkr and not you have to pay the same amount but in stable coins. What difference does that make in economy nothing instead of features like mentioning, and making system corruption free and believe me those who are at top do not want there money to be traced by some blockchain technology so they just hate these idea.

There's no such traditional cryptocurrency or modern cryptocurrency in the first place!

To fight against depreciating economy aka inflation, you need to convert all of your fiat into something that the price will keep increase in the long run e.g. gold, Bitcoin. Stable coin or CBDC is backed by fiat, which mean the price will inflated overtime.

Stable coin just like FIAT money. Indeed it is easier to get stable coins than FIAT money. As in some places where there is no currency exchange. Of course it is easier to get stable coins from the exchange market on the internet. But my question is whether the stable coin can be used in that country?

Using stablecoins in unstable economies has its benefits, like stability and easy digital transactions. But there are things to consider too. Governments might worry about how it all works and setting up the tech in less advanced places. Getting people to trust and use stablecoins could be a challenge. And relying too much on them might affect a country's control over its economy.

stability and depreciation? A coin can be stable, but its value can still depreciate in some circumstances. If the stable coins are backed by a physical asset whose value is also bound to depreciate with an increase in the inflation rate, will it still save the economy? Most of those stable coins are backed by some fiat, like the USD, which means if the value of the USD depreciates, they will also be affected. Even volatile assets like Bitcoin are very important in the economy; they're a hedge against inflation as their value can greatly improve over a short or long period of time, but if inflation strikes, fiat drop in purchase power due to value depreciation.

Stablecoins are a digital representation of the dollar on one of the blockchains with promises that its value will be equivalent to 1 dollar and this promise is made by companies while local currencies are promises that your currency has a value that is determined and defended by the central bank in your country and therefore in many cases local currencies are better than stablecoins Because promises from a central bank are much better than a company, and these currencies are linked to the value of the dollar, and there are many currencies linked to the dollar, such as the currencies of the Arab Gulf.

Stablecoins will not help countries and may be harmful even at the level of individuals.

Basically the logic is that stablecoin is pegged to dollars and dollar loses its value every year due to inflation. Which means that we are going to end up with something that will change the end result, you are not making a profit by holding it.

Not a lot of good passive income from them neither, some places give you like 2.5% or so return for keeping your USDT with them, but in most cases inflation is higher, and that means that you are not making any profit at all, you are losing it. The only acceptable reason to have it is that bitcoin may crash, and because of that you may end up getting a bigger result and should see some changes for sure. I think it's important to do something like that in order to have a greater return.

Stablecoins won’t help traditional economies. You have to remember the dollar is being abandoned as the world’s reserve currency due to the US amassing debt with money printing and currency devaluation set in place for decades. People don’t want more access to dollars, they want money free from government manipulation and debts.

Sorry it will not. Stable coins have depreciating value like you have criticized fiat. How can stablecoin help an economy? Just a digital currency and how can that be possible when people are dumping their currency for bitcoin that is not tied to any debt repayment. Moreover, countries are architect of their own misfortune and currency can't just be the messiah. Rather it is the policy of government that has devalued fiat and they know how to get out of it by thinking properly otherwise more people are already dumping and hodling bitcoin.

stablecoins could provide some benefits in stabilizing a depreciating economy, they are not a comprehensive solution and should be considered as part of a broader strategy. Economic stability requires addressing underlying issues that cause depreciation, such as fiscal and monetary policy, structural reforms, and addressing external factors. Additionally, careful regulation and oversight are needed to ensure that stablecoins are used responsibly and do not lead to unintended negative consequences.

Stable coin has nothing to do with country economy challenge's that the world is facing today, the major reason for a stable coin is for trading pair value, for instant, as a Bitcoin trader, when the market going down or experiencing depreciating in Bitcoin or other alt-coins value, for a better position is to convert your Bitcoin or other alt-coins into stable coin like USDT, BUSD and many more, to maintain your digital asset value. Not to depreciate much in value.

The fundamental issue of economic instability can not be solved by a mere stablecoin. Besides you did not exactly state in which FIAT-backed currencies or assets the stablecoin is relying upon.

A country has its own regulation and law in regard to the currency that can be utilized within its own respective country, they can not simply force their citizen to use an obscure stablecoin which as of now does not test thoroughly for widespread usage, especially for country economic-specific purposes. So here you did not include the main aspect of the true roots of the economic instability problem.

That’s not the purpose of a stablecoin and seriously the economy of the country is too big to handle and imagine even Dollar and gold can’t control inflation so what more of a stablecoin. We must accept that inflation is inevitable, we can only delay it but sooner or later it will still rise simply because of growing population and the supply is getting limited. Stablecoins are not stable at all, so be careful on holding it.

Stable coins might have that word " Stable " but they can still decline like a normal currency so I don't think they can provide a solution but unless maybe if we are talking about an almost dead currency like what have happened to the currency of some countries, as most stable coins in cryptos are backed by a dollar. As you said, they can only lend some help, so we shouldn't entirely depend on them.

As I said earlier, Stable coins are like a regular currency, they are centralized and already regulated. There is still better than a Stable coin and that is, non-other than  Bitcoin. Stable coins are still subject to inflation but Bitcoin is an anti-inflation.

I think it's a double edged sword. Knowing that it has both potential to save the economy when done properly and at the same time, it could worsen it.

The most important part for a country that has this situation is that their leaders should have the knowledge and probably a different one because they just make it worse with a different way. They are the ones responsible why they have that kind of economy. It shouldn't be repeated when dealing with it.

You've got it all wrong. Stablecoins don't solve the inflation problem. After all, they're directly tied to Fiat currencies (usually the USD). The only benefits they bring are portability, faster and cheaper transfers (depending on the Blockchain network they're deployed into), and programmability.

With CBDCs right around the corner, it's likely stablecoins will cease to exist in the future. After all, governments will have more power/control with a CBDC than a privately-owned stablecoin. The future is unpredictable, so expect the unexpected. Maybe stablecoins will get to live alongside government-issued digital currencies (CBDCs) forever? Just my thoughts ;D

Well maybe they can and this is why Bank of England has now released a stablecoin regulation plan. They want to bring stablecoins in its real economy.
Executive director of Consumers and Competition at the Financial Conduct Authority Sheldon Mills had good things to say for stabelcoins. 'Stablecoins have the potential to make payments faster and cheaper for all, and that’s why we want to offer firms the ability to utilise this innovation safely and securely'.
https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers

How would stablecoins save a depreciating economy? Aren't them tied directly to the value of national (Fiat) currencies? I appreciate the UK's efforts in embracing the revolution with open arms. But simply adopting stablecoins is not enough to save their economy. Putting inflation under control is what will eventually solve the problem. The thing is, our world is going from one crisis to another. With the COVID-19 pandemic still at large, rising geopolitical tensions, and wars, we can never expect the mainstream economy to recover.

I know crypto/Blockchain tech is the future, but it's not a "magical pill" to solve all of our problems. One thing for sure is that stablecoins are utterly-centralized. Why would I trust a stablecoin that can be easily manipulated at will? It's even worse than Fiat. I'd prefer truly-decentralized cryptocurrencies not driven by a company's own interests. Bitcoin has greater potential to save our economy. Some countries already adopted it as legal tender and the results have been impressive. Maybe our world will switch to the "Bitcoin Standard" someday? :D

All stablecoins are pegged to USD and if done correctly then it can boost the economy. In countries like Lebanon and others where there is too much fluctuation in local currency, using stablecoin would help them. In countries where the local currency is stable using stable coins would only destroy their economy. Then there is a big question as to why use a stablecoin as it will indirectly give economic control to the USD or the US government. What the UK government is doing just replicating their pound to a stablecoin and creating their form of CBDC I think.

Nice information, but it is a different context.

What is envisioned by OP is that stablecoin helps in times of economic downturn, on the other hand, the paper, from what I skimmed, is mainly a regulation framework proposal. This has nothing to do with saving the economy, but rather to regulate its usage.

They did not offer this regulation to solve and helps the economy but rather to govern external factor that contributes to their internal economic system. So as I already said, stablecoins certainly can not become the sole solution that helps the economy.

Honestly it was an old topic that people already answered on how that would not be possible. Obviously, as with any idea in the world, there were some people who think that it was possible, there are people who think that lizard people live among us too, so it is not like any idea is too far fetched for some people, if you make sure that they do end up with thinking it would save those economies, but the reality is that the common mind would say that it is not possible, and that's what majority of the people here said.

I think it is clear that the topic was silenced and not getting any response for a long time now because of that, people already said that it would not be possible and it would be quite unlikely to happen.

I do not see how this works. Stable coins like USDT, USDC, etc are pegged to US dollar. Being pegged to dollar means that it will always maintain the same value as the US dollar. With that said, the difference it has from the actual US dollar is that it is a cryptocurrency that was made to escape volatility of most cryptocurrencies (like Bitcoin, etc). How then does this help a deprecating economy? I mean… it’s just the US dollar anyway. Is there something I missed or can someone make this make more sense?

Stablecoins have the potential to increase financial inclusion by providing access to digital financial services for individuals who are unbanked or underbanked. This can have a transformative impact on the lives of many people who currently lack access to traditional banking services.

Public acceptance is a major  factor that need to be carefully addressed to ensure the successful implementation of stablecoins. If people will accept it and use much as fiat currency so it can be dominant currency.

There is a major weak point in Stablecoins that they can depegg anytime like we have seen a case of UST. That was on Luna Chain its also came down when Luna came down. So this is a major issue with stablecoins.

Failing economies could just adopt the US dollar if they think it will boost them in some way. Stablecoins could be useful if they were more widely accepted. Currently, their greatest benefit is as a store of value. The US dollar is still susceptible to manipulation and inflation but it will not depreciate as fast as a currency suffering hyperinflation.

If they're turning the pound into a stablecoin, then it would be no different than launching a CBDC to the public. I'm yet to see whenever stablecoins will last, or become a failed experiment. It's no secret that some stablecoins lost their peg in the past. It would harm the mainstream economy like never before. Ultimately, the plan is to make a digital cash system that's completely under the government's control.

Launching a stablecoin or CBDC on a public blockchain network is a terrible idea. I think they're better off launching their own coin on a Blockchain under their control (private chain). It's the first time governments take such a venture, so anything can happen in the long run. With or without stablecoins, you can rest assured truly-decentralized cryptocurrencies won't be going anywhere soon. Just my thoughts ;D

I still have to rethink how stable crypto coin would hwlp a falling economy. Many of these stable coins are owned by individuals that are not attributed to the government. The government can decide to create it own digital coin just like China had done and that would help people to run transactions using the coin online especially for swapping and payment of services. Digital coin am be implemented by a country but that does not determine the growth of the actually economy.

I don't think any cryptocurrency except Bitcoin is truly decentralized. Regardless of their benefits and the biggest myth is stablecoin considered as a decentralized entity. Being said that creation of stablecoin itself is a controversial issue. Some say it helps traders whereas some say it is a way of the US government entering into the cryptocurrency world.

I am not saying it is a good idea by the UK what I am trying to say is that they think it is a good idea. You are right creating a CBDC on a public Blockchain using a third party vendor is terrible idea. What if the third party vendor in this case is an unknown entity of the government. There can be many reason for the government to come up with such an idea but in the end the main purpose of any government is to always monitor financial activities of its citizens.

From the article they just want to regulate it so it can be better kind of, not like it's about to saving their economy with stablecoin
Relying on stablecoins to save an economy is like adopting the USD and expecting it to save your dying economy. A few months ago the British government was complaining about how the inflation of the US has affected the value of other currencies. Inflation in the US affected a lot of countries.
This might only work in a country that has a very poor currency but for countries that have a relatively stable currency, it would be a disaster. Imagine England ditching the pound for the dollar.

Also, a stable currency is not all it takes to save a dying economy. If the country doesn't produce a lot of stuff to export then they're still going to keep suffering.
If there is political instability, foreign investors won't flock to that country to invest.
Also, an economy relying on a stablecoin might be hit by inflation if the currency that the stablecoin is backed by (usually the US dollar) is hit with inflation.

You're thinking right. Stablecoin is always counted as a dollar, but it is just a surrogate om the dollar. So the government can make it illegal at any time. I think that when CBDC will be launched, stablecoins will be even less reliable than it is now.

Basically the idea of CDBC or anything regarding governmental stablecoin basically, will not be free of corruption that governments are known for, so it is not going to be all that confusing to see this. I get that it may feel like it is not going to be all that easy to handle, but I think it would make sense to keep it going one way or another.

I hope that people could reach to a point where we could reach a greater profit eventually, but that should be free of governmental outreach. If they somehow get their hands on the crypto scene, even if they do not get a hold of bitcoin because it's decentralized, they could have 100+ billion worth stablecoin market and that should be something dangerous for all of us in the end.

How is that gonna work? Stable coins is pegged to a FIAT and depreciating economy would affect the FIAT itself so it's not really solve any problem. More than that, macro economy is a very complex thing, a cryptocurrency especially Stablecoin wouldn't solve it's problem.

Same with on this confusion mate, I think the major reason for fiat depreciation over is the increased printing of fiat money which has brought a sense of devaluing of the money which stable coins are not inline with this logic. Stable coins like USDT are way different than the normal fiat currency because the supply is actually less than the demand giving it value and for fiat it's opposite where the supply is more.

These stablecoins could have provided alternatives to governments and various financial institutions. At least to avoid the crypto wave, which they fear because it will destroy their industry in the monopoly of providing financial services. But their dreams did not last long because those stablecoins proved to be not actually stable, and the name was derived only from their connection to the dollar without taking into account other peculiarities that make stablecoins one of the most dangerous assets that can be used.

Fragile economies need comprehensive rehabilitation that relieves them of the trouble of being tied to foreign currencies such as the dominance of the dollar, and at the same time they cannot venture to adopt Bitcoin or any of the cryptocurrencies due to price instability and weak liquidity. Today, most economists are studying the possibility of benefiting from centralized currencies on the blockchain in the so-called CBDC, which is expected to provide better results.

All stablecoins are not pegged to USD. We have stablecoins pegged to EUR, INR etc but USD is the most common in the space and widely acceptable. Using stablecoin is much easier for people outside of the USA and Europe. If you live outside of Europe you can still keep your money in EURO currencies by using the EURO pegged stablecoin. This becomes convenient for many people but there is some risk associated with it. Most of this stablecoin is related to lending platform and these platforms are one of the primary targets of hackers and exploiters. So if these lending platforms got affected their stablecoin would as well.

Stable coins are mostly owned by private individuals or group of people like team. I don't think the government have the time to create a stable coin when they can easily develop there local fiat and create a digital version just like the way we have Chinese Yuan. This kind of coin enables citizens and other people that are ready to trade with such a coin. The government can only regulate stable coins but don't have a full right to own there own stable coin. Stable are mostly use by people to create a differences between volatile coins and escape bear market.

I don't think in countries like Lebanon the government is promoting crypto based stablecoins. It is their citizens who are using it due to the hyperinflation these countries economies are going through. They need to use an alternative of their fiat currencies to get away from the inflation and crypto based major stable coins like USDT and USDC are some of the most convenient for them to use. They can easily use them like they use a credit card and it is not hard to integrate them with their local businesses. The government can not directly use them as there will be regulatory issues.

Economic depreciation has nothing to do with currency at all, because economic depreciation means the wear and tear of an asset beyond its expected capacity or utility. So it's related to the assets of an economy, not the currency. And the causes of the depreciation are wear and tear on an asset, perishability, economic advancement, expiration of dates, etc.Even if you meant depreciation of currency, stable coins are not changing their value; they carry the same value as the fiat currency. Then how can you expect stable coins to save you from the depreciation of currency?So the depreciation of currency and the economy is a natural economic phenomenon, but when it crosses the line, the government and other parties are taking care of it.

USD is the world's reserve currency, so it's normal to see USD-pegged stablecoins being the driven forces of the crypto market. Stablecoins linked to other Fiat currencies are not as popular as the USD ones. In countries where it's hard to get access to the USD directly, stablecoins makes wonders. You can virtually send/receive USD anywhere in the world without a bank account. How cool is that? This versatility allows countries to save a "depreciating economy".

Of course, that is subject to the USD's inflation rates. If inflation soars like crazy, the USD will lose value big time. What sense would it make to use a USD-pegged stablecoin by then? I'm glad there are plenty of options for everyone. Maybe these stablecoins will become the new CBDCs in the future? :D

"The ease of sending 'digital cash' abroad without a bank is revolutionary. Isnt it like having a worldwide money at hand? That happens when inflation wobbles the USD? Suddenly, these stablecoins become unstable .

Imagine stablecoins pegged to a basket of currencies or commodities, reducing reliance on any single currency's stability. AI-driven stablecoins could modify pegs based on real-time economic variables. Think this may make the digital economy more resilient?

Your idea about stablecoins becoming CBDCs is intriguing. Is this the future of money? We're on the verge of a financial revolution as decentralised digital currencies change how we think about and use money. Huge potential, but also huge obstacles. Its a balancing act between innovation, regulation, and the ever-elusive trust of the public
"

No, I think that is not a very simple idea to just say stable coins will save a depreciating economy because a lot of factors are in play. When there is an economic depreciation, it doesn't have to mean that it is all just have to be about coins. Even war, natural disasters, pandemic and many other things can also lead to the instability of an economy which will then affect most probably the value of an asset a country may have. Perhaps in the smallest sense it may, but not totally or generally.

I believe governments will side with private companies to adopt stablecoins as their own. Why re-invent the wheel by launching a new digital currency from scratch? Using an already-established digital currency pegged to the value of Fiat, is the best solution. If governments take this approach, they will force private companies (Tether, Circle, Paxos, etc) to work for them. They will take over the world by storm whenever you like it or not.

Truly-decentralized cryptocurrencies (particularly Bitcoin) will survive, but they won't be used as massively as their centralized counterparts. The global economy will "reset", but with government-backed digital currencies as its "backbone". Who knows how far we are before this becomes a reality? :D