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As the U.S. moves closer to a federal framework for stablecoins, it would be a mistake to let fear of “private money” overwhelm the policy debate. One frequently invoked comparison is the free banking era, a period before modern bank regulation when private money circulated with uneven and often problematic results. From that history, critics argue that stablecoins threaten the “singleness of money” and are inherently destabilizing.
That argument draws the wrong lesson from history. At best, they point out the regulatory and design questions raised by stablecoins, including issues around reserves, redemption, liquidity and supervision. These are precisely the questions that financial regulation exists to address.
Viewed through that lens, the enactment of the GENIUS Act represents an important shift in the debate. Congress has moved the debate past the threshold question of whether stablecoins should exist. The question is whether regulation can make stablecoins sufficiently safe and reliable to function alongside other forms of private money in the modern financial system. History suggests the answer is yes.
The principal problem with free banking was not private issuance alone. It was issuance without standardized reserve requirements, credible redemption mechanisms, prudential supervision or effective disclosure. The resulting system was fragmented, opaque and prone to instability. Private money was not abolished. It was brought within a regulatory framework.
From: Yes, stablecoins are ‘private money.’ And no, that is not a problem | American Banker.
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