China’s central bank fears that stablecoins pose risks to the financial system

The lieutenant governor of China’s central bank has raised concerns that stablecoins like Tether (USDT) could pose a risk to the stability of the global financial ecosystem.

According to the CNBCFan Yifei, deputy governor of the People’s Bank of China (PBoC), said that digital currencies are pegged 1: 1 to a fiat currency, which worries him quite a bit.

“So-called stablecoins from some commercial institutions, especially global stablecoins, can pose risks and challenges to international currency, accounting and settlement systems,” Fan said in the report.

The deputy governor said his organization had taken action against cryptocurrencies.

On Tuesday, the PBoC shut down a Beijing-based company that provided software services for exchanging cryptocurrencies and reiterated that no other company will be allowed to do so in the future.

Fan Yifei also pointed out that the risk of assets outside of fixed value, particularly Bitcoin, is problematic.

“These currencies themselves have become instruments of speculation and pose risks to financial security and social stability,” he said.

The PBoC is working on the development of a digital yuan, or e-CNY for short, which will counteract the dominance of the US dollar as a global reserve currency.

And coins like USDT, USDC, BUSD are supposed to strengthen the US dollar in the digital environment, maybe that’s why China is criticizing it and maybe will soon do it for e-CNY.

Thach Sanh

According to Coindesk

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