Fed Governor Waller noted that stablecoins promote competition in the payment system, helping to lower costs and increase transaction speeds.
Stablecoins are seen as tools to improve efficiency in payments, while potentially affecting cash demand but increasing the overall demand for the USD.
MAIN CONTENT
Stablecoins reduce costs and increase payment speeds.
Competition from stablecoins benefits consumers and businesses.
Stablecoins may reduce the demand for cash but boost the overall demand for the USD.
How will stablecoins affect the payment system?
According to Mr. Waller, Governor of the U.S. Federal Reserve (Fed), stablecoins will help diversify and enhance payment efficiency, reduce costs, and increase transaction speeds.
Speaking at an event hosted by the Fed Dallas bank in July 2024, he emphasized that the development of stablecoins will create more quick and cost-saving payment options for users. This affirms the positive role of stablecoins in innovating the modern financial system.
"My goal as a free market economist is to reduce costs for households, consumers, and businesses through competition in the payment sector."
Christopher Waller, Fed Governor, July 2024
How do stablecoins affect the USD and cash?
Mr. Waller warns that stablecoins could reduce the demand for cash in the U.S. while simultaneously creating a larger demand for the USD overall.
The shift from cash to stablecoin payments not only changes spending habits but also significantly affects money circulation and the Fed's management of the money supply. Nevertheless, the USD still maintains a central role in both international and domestic transactions.
"Stablecoins may reduce the demand for cash from U.S. banks, but they increase the overall demand for the USD."
Christopher Waller, Fed Governor, speaking at Fed Dallas, 2024
How do stablecoins create competitive advantages?
Stablecoins promote competition by enabling many efficient payment solutions at lower costs, contributing to optimizing the financial system.
Economists and financial experts believe that the emergence of stablecoins will increase competition, forcing traditional financial institutions to innovate their services. For example, businesses and consumers benefit from lower transaction fees and faster payment speeds, enhancing liquidity in the economy.
Traditional Payment Factors | Stablecoin Payment Transaction Costs | Higher, intermediary fees | Lower, reduced intermediaries Processing Speeds | Bank-dependent, may be slow | Near-instant transactions Competition | Low due to technology constraints | High, due to diverse providers
How do stablecoins impact households and businesses?
Stablecoins contribute to reducing transaction costs, providing more convenience & safety for individual users and businesses.
Research from the Monetary Economics Institute in 2023 shows that households save 10-15% in costs when switching to stablecoin payments. Businesses can also reduce invoice processing times and increase liquidity thanks to fast and transparent payment mechanisms.
Frequently Asked Questions
What is a stablecoin? A stablecoin is a type of cryptocurrency with a stable value, typically pegged to a fiat currency like the USD. Are stablecoins safe? Stablecoins are developed and managed by reputable organizations with asset backing mechanisms to maintain stable value. How will the development of stablecoins affect cash? Stablecoins may reduce the demand for cash but boost overall demand for the USD. How do stablecoins help reduce payment costs? By reducing intermediaries and applying Blockchain technology, stablecoins lower fees and increase transaction speeds. Should businesses adopt stablecoins? Adopting stablecoins helps businesses reduce transaction costs, increase payment efficiency, and enhance liquidity.
Source: https://tintucbitcoin.com/stablecoin-thuc-day-nhu-cau-usd-waller/
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