The fundamental basis of stablecoins remains uncertain as these assets are subject to liquidity, credit, operational, cyber, settlement and governance risks, the Bank of Canada said in a recent review.
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The Canadian financial regulator noted that risks could undermine the trust of investors if authorities fail to manage digital assets properly. The central bank added:
“If stablecoins become more commonly used as a method of payment, these risks could disrupt economic activity more broadly and have system-wide implications.”
That being said, the central bank revealed it’s working with relevant Canadian authorities to ensure there is “global alignment on standards and best practices for regulating stablecoins.”
Eventually, the Bank of Canada wants to develop regulatory standards for stablecoins to protect consumers, the integrity of the financial system and national security.
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