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The rivalry between central banks and global stablecoins, Oct. 9–16

Editor’s note

Blockchain technology has attracted regulatory attention since its inception. The security of the Bitcoin network despite the value of BTC in play has consistently proved the resilience of blockchain technology in maintaining records across a vast range of parties.

However, many countries have determined that Bitcoin doesn’t behave as a currency at all, or at least not a replacement for their own. The nations behind the world’s most-used fiat currencies have in many cases pointed to Bitcoin’s volatility as a critical flaw. They have decided that the rise of stablecoins, especially over the past two years, poses a more clear and present danger.

New stablecoins, pegged to fiat or gold or baskets of currencies, can move value faster and more efficiently than existing monetary systems. Facebook’s announcement of Libra last year was a watershed moment. Monetary authorities quickly saw that Facebook’s user base is far larger than the population of any country. Practically overnight, Libra would conceivably be able to challenge every monterey authority on earth.

Some central banks had already begun work on their own digital currencies, but over the next year the U.S., EU, China, Japan and Great Britain — which issue the five leading currencies in the world — would all have active research into the subject of a CBDC. But while governments are trying to keep up in the race to upgrade their own currency, they remain suspicious of private entities like Facebook challenging them. While this has been going on for some time, the past week saw major flare-ups.