ECB: Malfunctioning of Global Stablecoins Could Pose Risk to Financial Stability
Main page News, Fintech, Facebook, Startups, Stablecoins, Libra

The European Central Bank (ECB) has issued a report on a regulatory and financial stability perspective of global stablecoins.

The financial regulator says a loss of trust in global stablecoins could lead to "substantial redemptions of coin holdings."

Unlike stablecoins, the ECB claims, bank deposits are covered by the bank’s guarantee of redeemability at par and, should that fail, the appropriate deposit guarantee scheme.

The ECB also admitted that Facebook's upcoming stablecoin project called Libra could potentially become "one of Europe’s largest" money market funds.

FSB: Stablecoins Generate Risks to Financial Stability at Significant Scale

There are a number of similarities with MMFs since Libra's assets under management will reportedly be invested in high‑quality highly liquid assets, such as top-rated short-term government bonds, bank deposits and cash, the ECB points out.

The Libra Reserve has the potential, therefore, to become one of the largest MMFs in the euro area.

Earlier iHodl reported that Facebook's Libra Association replenished with a new member —, a UK-based payment serviced provider for global businesses.

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