Stablecoins Unlikely to Replace Government Issued Currencies — Market Talk

Stablecoin usage could spread further into mainstream but are unlikely to replace government issued currencies, Capital Economics economists say in a note. Regulation, particularly in the U.S., is moving towards creating a more stable environment for further adoption and innovation of stablecoins, or cryptocurrencies pegged to traditional assets such as gold or the dollar, they say. Stablecoins could be increasingly used as a means of payment as companies like Amazon and Walmart consider their own coins and some commercial banks having launched their own stablecoins. However, stablecoins lack the backstop of government guarantees that come with most traditional currencies. "And although more stable than other cryptocurrencies, they have not always lived up to their promise of par convertibility." (renae.dyer@wsj.com)