Could stable coins save a deprecating economy

[darewaller]

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.

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.

Additionally, careful regulation and oversight are needed to ensure that stablecoins are used responsibly and do not lead to unintended negative consequences.

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.

[crwth]

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.

[Abiky]

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.

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

[mich]

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

[Abiky]

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?

[Bureau]

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.

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.

[vv181]

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.
~

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.

[bitgolden]

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?

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.

[oktana]

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?

[Publictalk792]

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.

[FinneysTrueVision]

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.

[Abiky]

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.

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

[Bushdark]

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.

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.

[Bureau]

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

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.

[Alpha Marine]

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

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.

[fzkto]

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.

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.

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.

[justdimin]

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.

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.

[icalical]

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.

[DaNNy001]

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?

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.

[Kavelj22]

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

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.