New York Fed makes case against stablecoins, favors tokenized deposit

Stablecoins, such as Tether (USDT-USD) and USD Coin (USCD-USD) that purport to be backed by fiat currency, are unlikely to become the future of payments, the Federal Reserve Bank of New York said in a blog post on Monday. The district bank makes the distinction between the currency used, i.e., stablecoins, bitcoin, U.S. dollars, and the exchange mechanism. The blog post considers whether distributed ledger technology platforms are here to stay and what's the best possible money that that can be used as a means of payment on that transfer mechanism. The New York Fed gave three argument against stablecoins: 1) stablecoins tie up liquidity unnecessarily; 2) stablecoins that don't tie up liquidity are risky and less fungible; and 3). "We already have an efficient form of digital money; we just need to adapt it to a new environment." To sum it up, the authors suggest that tokenized deposits would