Stablecoins May Reshape the Payment System
Stablecoins became a hot topic at the Davos Forum, where experts believe they have the potential to reshape the payment system, although potential risks cannot be ignored.
Jeremy Allaire, co-founder and CEO of Circle, pointed out that under regulatory frameworks in the US and EU, payment stablecoins are defined as 'cash instruments' for payment and settlement purposes. Therefore, they should not be allowed to bear interest. He supports this design and believes it contributes to financial system stability.
Market Subsidies Spark Debate
Some companies currently attract users through 'reward' mechanisms, sparking concerns among banks about deposit outflows and credit drying up. Allaire, however, argues these concerns are exaggerated.
- He cited the development of money market funds
- Noted that those funds did not destroy the banking credit system
- Emphasized the market’s ability to self-regulate
The Introduction of 'New Physics of Money'
Allaire introduced the concept of the 'New Physics of Money,' suggesting that the widespread adoption of stablecoins will significantly increase the velocity of money. This means societies may soon be able to support large-scale economic activity with a smaller monetary base.
This shift could fundamentally change traditional views on money supply, monetary policy, and financial infrastructure.
Transforming Future Economic Activity
Allaire also boldly predicted that billions of AI agents will enter economic activities within the next three to five years. This will bring unprecedented changes to payment systems, financial products, and the way the economy operates.
He emphasized that building an efficient, transparent, and compliant stablecoin system is essential to laying a solid foundation for this new era.