The Rise and Risks of Stablecoins
In a recent statement, the Governor of the South African Reserve Bank expressed concerns about the rapid growth of stablecoins.
Stablecoins, often pegged to fiat currencies or other assets, are seen as a more stable alternative within the crypto space.
- However, the quality of their underlying assets and lack of regulation remain major issues.
- A loss of confidence could trigger a cascade of failures.
- Crypto assets are not true safe-haven assets and can become sources of systemic risk.
The governor warned that the crypto market could potentially "fall apart" under extreme conditions, and such risks should not be ignored.