The government of the British Virgin Islands, in partnership with LIFElabs.io, will be launching a government-backed stablecoin. The BVI is a British overseas territory that currently relies on the USD as its national currency. LIFEtokens will be pegged 1:1 against the USD and be accessible to both residents and tourists.
“A central bank digital currency would allow citizens to use central bank money directly in their daily transactions. However, depending on its design, a central bank digital currency could pose risks. For instance, they could alter the way in which monetary policy is conducted and transmitted to the real economy. They could also carry implications for the functioning of the global financial system and its stability. The question of central bank digital currencies and their optimal design therefore warrants further analysis.”
“As digital assets transcend national borders, what does this mean for those interested in issuing or participating in a stablecoin project? What are the regulatory questions and other challenges that need to be considered? We take a look at the global picture in this comprehensive analysis.”
This column proposes locking stablecoins into an ETF-like structure with restrictions on basket composition. Stablecoin providers would be functionally similar to ETF sponsors, and stablecoins would become a new vehicle for traditional fiat currencies.
After a huge increase in the number of fintech start-ups founded between 2004 and 2015, there has since been a rapid decline: from 390 in 2015 to just 71 in 2018.
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The Kiffmeister is a former Senior Financial Sector Expert at the International Monetary Fund.
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