As cryptocurrencies continue to fall and rise again, stablecoinsThey are currently growing. But this is becoming worrying according to many economists, including the president of the Boston Federal Reserve, Eric Rosengren. M. Rosengren pointed at a stablecoin which could be a “disruptor”: the Tether (USDT).
Tether (USDT), this “ disruptor ”
Eric Rosengren made a recent presentation titled ‘‘Financial stability’. In his presentation, he identified the stablecoin Tether (USDT) as a “disruptor”. For good reason, according to him, it is at the heart of three different “Financial stability challenges”. Here are the three challenges that Mr. Rosengren identified: the housing market, emergency loans in times of crisis and “Periodic disruptions in short-term credit markets”.
Yes the Tether (USDT) becomes a ‘‘disruptive”, it is among other things because of the strong growth experienced by stablecoins. Indeed, today, they take 20% of the total assets under management of monetary mutual funds.
Due to the growth of stablecoins, M. Rosengren believes that it is necessary to worry. “I really think we need to think more broadly about what might disrupt short-term credit markets over time, and stablecoins are certainly a part of that.”
Caitlin Long reacts, Eric Rosengren riposte
The Tether (USDT) and other cryptocurrencies, disruptors? Yes, according to Eric Rosengren. However, not everyone shares his opinion. To this end, Caitlin Long, CEO of Avanti Financial Group, came out of silence and posted his pitch on Twitter.
The intervention of Ms. Long did that Eric Rosengren reviewed his notes. He now claims that the growth of stablecoins does not pose a threat to the credit markets. However, he considers that if this growth continues, there may be a real impact on the market.
“I am concerned that the stablecoin market, which is currently quite lightly regulated, will become a more important sector of our economy and that we need to take seriously what happens when people flee from this type of instrument very quickly. And just as money market funds caused a bad disruption in credit markets, I think a future financial stability problem could arise if we don’t start to think carefully about what happens to things like stablecoins ”.
To support his theory, Mr. Rosengren mentioned the news of a stablecoin which he however refused to name. “We had a stablecoin which ran into financial difficulties last week”, he just said.
The growth of stablecoins may become problematic over time. This is the opinion of the president of the Boston Federal Reserve, Eric Rosengren. However, his opinion is not shared by other players in the cryptocurrency field.
The comments and opinions expressed in this article are those of the author alone, and should not be considered as investment advice. Do your own research before making any investment decisions.