TL; DR
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The EBA just issued a public consultation raise issues surrounding the liquidity of stablecoins.
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They fear that a bank run could happen at any time, and in such a case the people issuing the stablecoins would not be liquid enough to stay afloat.
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The EBA suggests that stablecoin issuers (and some similar issuers) will be required to have equity equal to 3% of their reserves.
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And – these issuers will have to suffer liquidity stress tests to better identify who needs babysitting and who is more stable (pun intended).
Full story
Do you all understand stablecoins?
The idea is that you can buy a stablecoin and it acts as a fiat currency.
“Can you use that in a sentence” – You
“Sure” – Us
For example: the USDC is a stablecoin pegged to the US dollar.
So 1 USDC = 1 US dollar
It’s pretty neat – but!
The European Bank Association (EBA) says: “Wait a minute guys, we see a problem.”
Here’s the deal:
The EBA just issued a public consultation raise issues surrounding the liquidity of stablecoins.
They fear that a bank run could happen at any time, and in such a case the people issuing the stablecoins would not be liquid enough to stay afloat.
The EBA suggests that stablecoin issuers (and some similar issuers) will be required to have equity equal to 3% of their reserves.
This is more than the usual 2%.
AND!
These issuers will have to suffer liquidity stress tests to better identify who needs babysitting and who is more stable (pun intended).
This could start as early as June 2024.
While there is still much to do, this is a start for potentially safer stablecoin investments.