Could stable coins save a deprecating economy

[Thehallows]

 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.

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[Hatchy]

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.

[Yogee]

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.

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

[_act_]

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.

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.

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.

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.

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

[jrrsparkles]

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.

[Coyster]

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.

[YOSHIE]

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:

Economic stability is the basis for achieving an increase in people's welfare, namely through increasing high economic growth.
Economic stability will be achieved when there is a balance or continuity between domestic demand and domestic spending, saving and investment.

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

[Faisal2202]

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.

[Apocollapse]

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.

[Godday]

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?

[Adreman23]

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.

[Dr.Bitcoin_Strange]

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.

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.

[hugeblack]

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.

[bitgolden]

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.

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.

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.

[OgNasty]

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.

[Gozie51]

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.

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.

[aseprebel]

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.

[Magic-Money]

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.

[vv181]

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.

[goaldigger]

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.