The Fed cites worries about stablecoin in its latest Financial Stability Report
The United States Federal Reserve Board released its semiannual Financial Stability Report on Monday. The report points to the volatility on commodities markets brought on by the Russian invasion of Ukraine, the spread of the omicron variant of COVID-19 and “higher and more persistent than expected” inflation as sources of instability.
Stablecoins and some types of money market funds were singled out in the report and noted to be prone to runs. According to the Fed, stablecoins have an aggregate value of $180 billion, with 80% of that amount represented by (USDT), (USDC), and Binance USD (BUSD). They are backed by assets that may lose value or become illiquid during stress, leading to redemption risks, and those risks may be exacerbated by a lack of transparency, the central bank said.
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