Expert: Whether stablecoins can be stable remains to be seen

PANews reported on July 28 that Hu Zhihao, a researcher at the Institute of Finance of the Chinese Academy of Social Sciences and deputy director of the National Finance and Development Laboratory, published an article in the Economic Daily stating that in 2017, USDT, which was still in its early stages of development, had been questioned about the authenticity of its reserves, which led to a crisis of trust. In March 2023, USDC, known for its "transparent reserves and strong compliance", suffered a run on its reserves as part of its reserve assets were deposited in Silicon Valley Bank, following the bankruptcy of Silicon Valley Bank. This is the case with legal stablecoins, let alone the various "death spirals" that algorithmic stablecoins have encountered. This forces us to take it seriously. Stablecoins that have some monetary functions must be subject to corresponding supervision due to their public goods attributes. At present, we can neither turn a blind eye to the craze for stablecoins nor rush into it. We should seek benefits and avoid harm while recognizing the nature of stablecoins, and strive to create a good ecology that promotes the healthy development of the digital economy.