China’s Central Bank ‘Worried’ Stablecoins Pose Risk to Financial System

China’s Central Bank ‘Worried’ Stablecoins Pose Risk to Financial System

A deputy governor of China’s central bank has voiced concern that stablecoins, such as Tether, could pose a risk to the stability of the global financial ecosystem.

According to a report by CNBC on Thursday, Fan Yifei, a deputy governor of the People’s Bank of China (PBOC), said digital currencies pegged 1:1: to a fiat currency had the bank “quite worried.”

“Some commercial organizations’ so-called stablecoins, especially global stablecoins, may bring risks and challenges to the international monetary system, payments and settlement system,” the report cited Fan as saying.

The banker said his institution was already taking measures against cryptos.

On Tuesday, PBOC closed down a Beijing-based company providing software services for virtual currency transactions, reaffirming no businesses under its purview should engage in such transactions.

Fan also pointed toward the risk of assets outside a pegged value, namely bitcoin, as being problematic.

“These currencies have themselves become speculation tools,” Fan said, who added they posed a risk to “financial security and social stability.”

PBOC is committed to the rollout of its development of a central bank digital currency, or digital yuan, which, in turn, is said to pose its own risks to the dominance of the U.S. dollar as a global reserve currency.

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