POST CBDC USDC

The Centre for Economic Policy Research (CEPR) published a 2022 report in their Future of Banking series on “Technology and Finance” in which they said that a crucial factor in the evolution of stablecoins may be whether fintechs are granted access to central bank settlement accounts. As they pointed out, non-bank entities issuing fiat stablecoins (such as a digital dollar) must guarantee the one-for-one convertibility with central back money. The lack of legal eligibility for non-bank payment providers to access to central bank accounts and liquidity facility services complicates such a guarantee, which threatens to jeopardise the stability of new digital payments as was indeed observed when Circle’s USDC dollar peg was broken after the collapse of Silicon Valley Bank (SVB) because a proportion of the dollars backing USDC were commercial deposits in SVB.