Over on the International Monetary Fund's blog, Tobias Adrian and Tommaso Mancini-Griffoli recently wrapped up a two-part series on stablecoins' potential benefits and risks.
The authors spend a lot of time on the risk side of the equation in particular, as you might expect. They lay out six specific risks in the space, including formation of new monopolies and possible enabling of elicit activities like terrorism financing, as well as some potential fixes.
It's perhaps easy to scoff at a major institution in the world of traditional finance slagging on a technology that's potentially disruptive to their own space. But I think that would be a mistake.
For me, the interesting thing about the IMF here is that it's largely run by bankers from the "rich world" – to borrow a favorite shorthand from the Economist – but a big part of the IMF's work is helping the developing world. In other words, the very parts of the world that many crypto tokens in general and stablecoins in particular, like Facebook's Libra Project, aim to help.
If the dream of making banking easier for people in developing countries is to come true, it makes sense to pay at least a little attention to the IMF's thoughts on the matter. Even if they've had their own share of missteps in these regions – a common criticism of the IMF – stablecoin proponents should at least consider their experience so as not to repeat their mistakes unnecessarily.
Header image by Josh Appel via Unsplash.