Stablecoin News for week ending Tuesday 5th May 2020

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What will the long term effect of the COVID-19 Pandemic be on Stablecoins?

 

Here is our pick of the 3 most important Stablecoin news stories during the week:

Historically, Pandemics accelerate and intensify pre existing trends.  For those wishing to get an excellent primer on the history of Pandemics and their effect on our societies, take a look at this video by the Economic historian Dr Stephen Davies on YouTube.

When we turn to Trading, this often means the bid for so-called safe haven assets is stronger and probably far more lasting. Think gold, the Swiss Franc, the US Dollar and the bonds of ever-rarer, rock-solid national borrowers. Riskier plays, by contrast, may well see more skittish demand profiles.

Now at the Financial markets infrastructure level, will the sometimes staggering march to Digital pick up the pace?  Will all of the Central Bank Digital Currency (CBDC) projects be upgraded or will they wither on the vine? This week we focus on this topic and try to get an assessment of the implications of the current pandemic for the future.  

 

  • This assessment from ING is that CBDC will be a more likely option post-Covid-19. The bigger role of governments and the close cooperation between them and the financial sector in combating the economic fallout will guide discussions about CBDC in the context of the role the financial sector has in serving society.  ING //think.ing.com/ 
  • Libra does not have the Fed!  In this Coindesk article an Ex-IMF Economist claims that Libra has a flawed model as it has no lender of last resort and makes the assumption that during a time of crises like what we are having that it would need this extra firepower.  Libra Has a Flawed Crisis Model

 

  •   Stable coin demand surgesOne of the most curious and subtle developments of the COVID-19 global pandemic is the surging demand for stablecoins. This article from CoinTelegraph covers that recently their total supply hit an all-time high — roughly $7.5 billion — with demand for Tether (USDT) and USD Coin (USDC) soaring. Surging Demand Following the COVID-19 Pandemic

Finally an interesting chart: Virus versus the VIX! 

VIX v Virus

So let’s end on a happier note, according to this chart the Virus peaked a month ago and market stress as measured by the VIX is easing with it.  I trust you enjoyed these articles and found something new and interesting.  

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