The German liberl-conservative daily Die Welt covered the Basel-based Bank for International Settlements (BIS) warnings on the destabilizing potential of stablecoins, as well similar warnings issued by U.S. economist Barry Eichengreen, both of which EIR has previously covered. The Die Welt article, signed by economic editors Holger Zschäpitz and Anja Ettel, reflects the generally different approach on stablecoins in the European financial establishment, which is in favor of developing a Central Bank Digital Currency, but would like to regulate proliferation of private currencies.
“While the U.S. government is pushing ahead with the digital money revolution with a new law, financial regulators and economists are warning of the risks and side effects of the new means of payment. In the worst case, the scenario of the 19th century could repeat itself—with massive losses of wealth and instability,” wrote Die Welt. The reference is to the post-1837 chaos, after President Andrew Jackson shut down the Second National Bank of the United States, and every U.S. bank then started to issue its own money.
“The new law has not yet come into force, but the gold rush has long since begun. Hardly a day goes by without new so-called stablecoin projects being announced— digital coins such as FIUSD, PYUSD or USDC, which are pegged to the dollar or the euro and promise the dawn of a new era of money. The law that triggered the gold rush is called the ‘Genius Act’ and, according to U.S. President Donald Trump, should become reality as soon as possible. It specifies how stablecoins are to be regulated and integrated into the traditional financial system in the future.
