BIS to Monitor Stablecoins, Focus on CBDC Experiments
The Bank for International Settlements (BIS), known as the "bank for central banks," plans to ramp up its research of central bank digital currencies (CBDCs) through its research and development arm. Additionally, the bank is launching a new project to closely observe stablecoins.?
The BIS Innovation Hub, established in 2019, has teamed up with central banks worldwide to finish a total of five CBDC initiatives, according to a recent report. An additional 21 projects are currently underway.
BIS has announced its focus for the year, which includes the launch of Project Pyxtrial - a platform designed to enhance the systematic monitoring of stablecoins.?
Stablecoins play a crucial role in the cryptocurrency exchange as they provide a bridge between digital assets and fiat currencies. However, the recent depegging and collapse of algorithmic stablecoins like TerraUSD and concerns about the reserves behind fiat-backed stablecoins have made regulators and central banks cautious.
This project is aimed at creating a digital version of the verification process for stablecoins and monitor their balance sheets. This is essential as most central banks currently lack the tools to monitor stablecoins systematically and avoid asset-liquidity mismatch. Pyxtrial will explore various technological tools that can help regulators and supervisors build data-driven policy frameworks.
Pyxtrial will address the challenges posed by stablecoins and ensure that these digital assets are used in a safe and secure manner. This initiative is part of the BIS's broader efforts to promote the development of safe and innovative financial technologies, including stablecoins.
The launch of Project Pyxtrial is expected to be a significant step forward in the development of stablecoins and their integration into the global financial system. With the growth in popularity and use of stablecoins, it is essential that regulators have the tools and information necessary to mitigate risks and ensure that these digital assets are used in a manner consistent with financial stability and integrity.
CBW - External Analyst
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